What question did this study set out to answer?

The research aims to enhance inventory classification using demand stability to reduce costs and obsolescence.

April 1, 2026Open Access

Multi-criteria inventory classification considering demand stability

Key Points

The research aims to enhance inventory classification using demand stability to reduce costs and obsolescence.
Conducted a case study on leverage for tunnel boring machine manufacturer's inventory.
Evaluated demand criticality using mean, standard deviation, and range of demand.
Developed a multi-criteria inventory classification method considering various criteria such as unit price and lead-time.
Ranked and classified SKUs according to the ABC principle.
Showed that integrating demand stability improved inventory performance.
Classified unstable SKUs to help inventory managers focus their efforts.
Achieved higher fill rates at a lower inventory cost.

Abstract

This paper focuses on the demand stability criterion for inventory classification. Unstable demand may lead to inventory obsolescence or emergency purchasing. A case study of multi-criteria inventory classification (MCIC) for a tunnel boring machine manufacturer is conducted. An MCIC method based on a classical MCIC model is proposed. The proposed method first evaluates demand criticality using the mean, standard deviation and range of demand. And then, the proposed method calculates the final criticality scores for Stock Keeping Units (SKUs) based on demand criticality and other criteria, e.g., unit price or lead-time. Finally, SKUs are ranked in descending order and classified by the ABC principle. The classification results can draw the attention of inventory managers to the unstable SKUs. The inventory performance analysis shows that inventory classification considering demand stability can achieve higher fill rates at lower cost.

Bookmark

View Full Paper