Complexity analysis

Complexity analysis combines two ABC analyses and highlights values at the intersection of the two measurement criteria. In ABC analysis, you group elements into three categories.

For example, you might classify products which yield more than a specified amount of revenue each years as A products, and products which yield less than a certain amount as C products. B products are those which yield less than A products but more than C products. Similarly, you might classify customers who buy the most units as A customers and those who buy the least as C customers.

Complexity analysis compares two categories, such as products and customers, against two measures. The measures are referred to as Coverage and Quantity.

For example, Coverage might correspond to Revenue and Quantity might correspond to Units. In that case, you can use complexity analysis to identify the customers from whom you earn the least revenue, and who also buy the fewest units.

This could be used, for example, to determine which customers buy small quantities of products with low annual dollar usage. For these orders, handling costs are greater than for fewer orders of large quantities.