Multi-Criteria Inventory Classification Based on Multi-Criteria Decision-Making (MCDM) Technique

The efficiency of an organizational supply chain system depends upon several factors. One of the major factors is inventory management. Efficient inventory management can generate more profit. To have an efficient control of a huge amount of inventory items, the traditional approach is to classify the inventory into different groups. Inventory classification using ABC analysis is one of the most widely employed techniques in organizations. However, ABC analysis is based on only single measurement. It has been recognized that other criteria are also important in inventory classification. In this work, A Multi-Criteria Decision Making (MCDM) technique-based approach is proposed for Multi-Criteria Inventory Classification (MCIC). To cope with multiple criteria, use of TOPSIS, a MCDM technique, is proposed for the MCIC. The methodology is illustrated using a case example from literature. Comparisons of the proposed approach with some previous methods are illustrated based on a classical MCIC problem.