Example of The Application of Weighed Operation Based On ABC Class
Actual distribution of ABC class in the electronics manufacturing company with 4051 active parts.
| ABC class | Number of items | Total amount required |
|---|---|---|
| A | 5％ | 70％ |
| B | 10％ | 15％ |
| C | 85％ | 15％ |
| Total | 100％ | 100％ |
Using this distribution of ABC class and change total number of the parts to 4000.
- Uniform Purchase
When you apply equal purchasing policy to all 4000 components, example weekly delivery and re-order point (safety stock) of 2 week supply assuming that there are no lot size constraints, the factory will have 16000 delivery in 4 weeks and average inventory will be 2.5 week supply.
| Uniform condition | Weighed condition | ||
|---|---|---|---|
| Items | Conditions | Items | Conditions |
| All items 4000 | Re-order point=2 week supply Delivery frequency=weekly |
A-class items 200 | Re-order point=1 week supply Delivery frequency=weekly |
| B-class items 400 | Re-order point=2 week supply Delivery frequency=bi-weekly |
||
| C-class items 3400 | Re-order point=3 week supply Delivery frequency=every 4 weeks |
||
- Weighed Purchase
In comparison, when weighed purchasing policy applied based on ABC class, example C class monthly (every 4 week) delivery with re-order point of 3 week supply, B class Bi-weekly delivery with re-order point of 2 weeks supply, A class weekly delivery with re-order point of 1 week supply, total number of delivery in 4 weeks will be (A 200x4=800)+(B 400x2=800)+(C 3400x1=3400)=5000 and average inventory will be (A 75%x1.5weeks)+(B 15%x3weeks)+(C 10%x3.5weeks)=1.925 week supply.
| ABC class | No of items | % of total value | Equal purchase | Weighed purchase | note | ||
|---|---|---|---|---|---|---|---|
| No of delivery in 4 weeks | average supply level | No of delivery in 4 weeks | average supply level | ||||
| A | 200 | 75% | 800 | 2.5 weeks | 800 | 1.5 weeksa | same delivery frequency, safety stock reduced from 2.5 to 1.5 weeksa, require tighter control with more man・hours. |
| B | 400 | 15% | 1600 | 2.5 weeks | 800 | 3 weeks | increased safety stock level by 20%, delivery frequency reduced to half. Less man・hour required. |
| C | 3400 | 10% | 13600 | 2.5 weeks | 3400 | 3.5 weeks | increased safety stock from 2.5 to 3.5 week supply, delivery frequency is one quarter. Drastically reduced man・hour requirement. |
| Total | 4000 | 100% | 16000 | 2.5 weeks | 5000 | 1.925 weeks | average inventory value reduced by 23%, delivery frequency reduced by 69%. Overall reduction of man・hour requirement |
a) A class item can be applied much tighter control like JIT daily delivery. If daily delivery with one day stock is applied, delivery frequency will be 4000 and average inventory level of A class item will be 1.5 days supply and total inventory level will be 1.025 week supply. reduction of inventory by 59%. Total delivery frequency also reduced to half from 16000 to 8200.
- Result
By applying weighed control based on ABC classification, required man-hours and inventory level are drastically reduced.
Read more about this topic: ABC Analysis
Famous quotes containing the words application, weighed, operation, based and/or class:
“Science is intimately integrated with the whole social structure and cultural tradition. They mutually support one other—only in certain types of society can science flourish, and conversely without a continuous and healthy development and application of science such a society cannot function properly.”
—Talcott Parsons (1902–1979)
“There was no corn—in the wide market-place
All loathliest things, even human flesh, was sold;
They weighed it in small scales—and many a face
Was fixt in eager horror then; his gold
The miser brought; the tender maid, grown bold
Through hunger, bared her scornèd charms in vain.”
—Percy Bysshe Shelley (1792–1822)
“Waiting for the race to become official, he began to feel as if he had as much effect on the final outcome of the operation as a single piece of a jumbo jigsaw puzzle has to its predetermined final design. Only the addition of the missing fragments of the puzzle would reveal if the picture was as he guessed it would be.”
—Stanley Kubrick (b. 1928)
“Foster the labor of our country by an undeviating metallic currency ... always recollecting that if labor is depressed neither commerce nor manufactures can flourish, as they are both based upon the production of labor, produced from the earth, or the mineral world.”
—Andrew Jackson (1767–1845)
“There is a certain class of unbelievers who sometimes ask me such questions as, if I think that I can live on vegetable food alone; and to strike at the root of the matter at once,—for the root is faith,—I am accustomed to answer such, that I can live on board nails. If they cannot understand that, they cannot understand much that I have to say.”
—Henry David Thoreau (1817–1862)