Implementation of the ABC Analysis to the Inventory Management
Abstract
In an ever-changing market, inventory management is becoming a major problem that requires thorough planning, supervision, and control. If companies are well managed and have good planning and control, they can last a long time. Poor inventory management is very detrimental to the business as it can cause the company to fail to meet customer or consumer demands, which can lead customers to choose other companies that can meet their demands. Plan your stockpiles to maintain balance, avoid excess or deficiency, and control storage costs. ABC analysis, one of the most common inventory management techniques, divides inventory into three categories (A, B, and C) based on total annual product usage or total inventory cost based on the Pareto principle. The goal of this study is to use ABC analysis in the company's inventory management to identify products in categories A, B, and C based on profitability and sales factors. The research phases include data collection, data preprocessing, exploratory data analysis, ABC analysis, key product analysis, and explanatory analysis. According to the research findings, Segment A accounts for 18% of the total product and generates 78% of the overall profit. Segment B contributes 23% of the total number of items and 16% of all revenue.
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