Sort and Classify

ABC Classes

The teaching thresholds turn sorted cumulative shares into A, B, and C classes.

highlighted = computed this step

A threshold

The teaching threshold for A class is 2/3.

A threshold=2/3\text{A threshold}=2/3
ABC inventory tableThe chart recomputes sorted annual dollar use, cumulative shares, and classes.ABC inventory tabletotal annual use 150X 60Y 40W 30Z 20annual dollar use, sorted high to lowitemdemandcostusecum shareclassX106602/5AY202402/3AW3013013/15BZ54201CclassesA: X,YB: WC: Zthresholds are policy choices

A class

X and Y stay within the threshold, so they are A class.

A class=X,Y\text{A class}=X,Y
ABC inventory tableThe chart recomputes sorted annual dollar use, cumulative shares, and classes.ABC inventory tabletotal annual use 150X 60Y 40W 30Z 20annual dollar use, sorted high to lowitemdemandcostusecum shareclassX106602/5AY202402/3AW3013013/15BZ54201CclassesA: X,YB: WC: Zthresholds are policy choices

B class

W is the next item after A, so it is B class under this teaching rule.

B class=W\text{B class}=W
ABC inventory tableThe chart recomputes sorted annual dollar use, cumulative shares, and classes.ABC inventory tabletotal annual use 150X 60Y 40W 30Z 20annual dollar use, sorted high to lowitemdemandcostusecum shareclassX106602/5AY202402/3AW3013013/15BZ54201CclassesA: X,YB: WC: Zthresholds are policy choices

C class

The remaining item Z is C class.

C class=Z\text{C class}=Z
ABC inventory tableThe chart recomputes sorted annual dollar use, cumulative shares, and classes.ABC inventory tabletotal annual use 150X 60Y 40W 30Z 20annual dollar use, sorted high to lowitemdemandcostusecum shareclassX106602/5AY202402/3AW3013013/15BZ54201CclassesA: X,YB: WC: Zthresholds are policy choices