The ABC XYZ analysis on consumption behavior

A significant means of classifying reference numbers as well as controlling planning and purchasing is what we call the ABC analysis. As a rule, you will find the following distribution (Fig. 55)  

Since only 20% of all reference numbers (=A parts) make up 80% of the le-quirement/consumption value, planning should concentrate on this area. It would be unadvisable and impractical to introduce a complex planning system for the less capital-intensive C parts. A simple planning procedure can often be used for many C parts. 

careful C parts are not necessarily cheap parts and A parts are not necessarily expensive parts. An A part that is frequently used can be much cheaper in the end than a rarely used C part This is why you should consider other criteria before you allocate a reference number to a demand recognition method. 

The consumption behavior of an reference number is a major indicator for the selection of a suitable planning procedure, for automatically determining the smoothing factor ALPHA for fine-tuning the demand forecast as well as for calculating the necessary safety stock in each case. 

A computer can be used to periodically calculate an objective figure per reference number of its consumption behavior. 

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