Setting Up ABC Stratification and ranking logic

You can set up your own parameters in Product ABC Stratification Setup to fine tune the ABC Stratification Standard Logic.

• Relative weighting applies a weight to each stratification group that is used when determining a final rank. You can assign a weighting factor to stratification groups (GMROI, sales, and hits), a relative importance value to a rank (A,B, C, and D), and a desired spread across the stratifications that are used to determine the final rank.
• Relative importance applies an importance to each rank.
• Relative spread is used to allocate the percentage of spread among the ranks.
• Sales, GMROI, and hits percent by rank that is different from what is set up in the standard logic

Example calculations

This is an example of the calculations performed in the Product Administration ABC Inventory Evaluation Report using the data from Product ABC Stratification Setup with a 40/30/20/10 relative importance, 30/50/20 relative weighting, and a spread of equal amounts of 25% for each ranking:

Sales rank importance (4-3-2-1, A-B-C-D) * .3 (Sales relative weighting) plus

GMROI rank importance (4-3-2-1, A-B-C-D) * .5 (GMROI relative weighting) plus

Hits rank importance (4-3-2-1, A-B-C-D) * .2 (Hits relative weighting)

minus 1 divided by 3 = score

A score that is greater than or equal to .75 is assigned rank A, a score that is greater than or equal to .50 is assigned rank B, a score that is greater than or equal to .25 is assigned rank C, and a score that is greater than or equal to .00 is assigned rank D.