OPS400 (2 discussion response 150 words).
I’m studying for my Management class and need an explanation.
- Rawat, K. (2015). Today’s inventory management systems: A tool in achieving best practices in Indian business. Anusandhanika, 7(1), 128-135.
- Chen, J., Dada, M., & Hu, Q. (2016). Designing supply contracts: buy-now, reserve, and wait-and-see. IIE Transactions, 48(10), 881-900. doi:10.1080/0740817X.2015.1110649
- Olsson, F. (2014). Analysis of inventory policies for perishable items with fixed leadtimes and lifetimes. Annals of Operations Research, 217(1), 399-423. doi: 10.1007/s10479-014-1590-x
- APICS, the association for operations management
- Institute of Industrial Engineers website
- Inventory Management website
- Operations Management textbook companion website for the 11th and 12th editions
Please respond to the 2 separate discussion post below in at least 150 words
ABC Analysis is the process of classifying inventory based on the value of items. ABC Analysis is a concept that comes from the Pareto Principle of 80/20. The Pareto Principle says that there is a vital few items in a group of many that make up about 80% of an organizations value. ABC Analysis highlights the fact that not all inventory is valued the same. Inventory is separated into groups of A,B, or C, with items in the “A” category given the highest value though this category will contain only about ten percent of inventory it represents the largest portion of value. The “B” class is of moderate value with around a quarter of an organizations value. The “C” category represents the rest of inventory and the least valuable bit.
A form of this inventory management system is actually utilized by the United States Navy. For instance the Navy is made up of ten Aircraft Carriers and about 75 Nuclear Submarines, this is only a small chunk of the approximately 500 warships in the Navy’s register; however these represent the largest amount of value to the navy from a defense standpoint (the “A” category) as they are the most expensive to maintain and the most crucial to the nation’s interests, the navy intern gives these platforms with the highest priority with regard to refit and repairs. These ships and boats (submarines are referred to as boats by submariners) also make up the current Nuclear Navy which the navy places the most value upon. These may not be exactly 80% of the total value but it is certainly the most significant. The “B” category is made up mostly by the remaining amphibious troop carriers, cruisers, cruisers, and other platforms as these make up the largest chunk of the navy but are relatively inexpensive and slightly more expendable then those in group “A” (to be clear I do not find any lives expendable. I am merely speaking from an expense and equipment standpoint). Group “C”; aircraft, also makes up a large portion of the Navy physically, however Aircraft individually are typically much less expensive and one individual jet or cargo plane is far less valuable than an entire warship to the navy. Of course, the navy has an extremely intricate supply system and individual parts are vastly more broken down into categories but as a whole, the Navy uses this system to prioritize the warships it has currently commissioned.
I have really enjoyed everyone’s posts during this class, good luck everyone!
M. (2016, May 10). A Complete Guide to ABC Analysis in Customer
Segmentation and Inventory. Retrieved September 30, 2019, from
Pawar, P. (2016, July 18). 6 Benefits to Adapting ABC Analysis of Inventory in your company. Retrieved September 30, 2019, from https://www.linkedin.com/pulse/6-benefits-adapting-abc-analysis-inventory-your-company-pranali-pawar/.
Rusanescu, M. (2014). ABC Analysis, Model for Classifying Inventory. Hidraulica, (2), 17–17. Retrieved from https://csuglobal.idm.oclc.org/login?url=https://s…
The Naval Supply Systems Command (NAVSUP) Integrated Weapons System Support Team is the logistics organization responsible for the spare parts support for all weapon systems for the Navy, Marine Corps, Joint, and Allied Forces (Luster, 2019). In order to meet the unique needs of their customers, the team developed a new inventory categorization technique. The technique, called WSS4, is based on an ABC analysis model and adapted to the demands and circumstances causing reliability issues within the weapons system supply chain (May, Atkinson, and Ferrer, 2017).
The team used the ABC analysis model to identify the most critical items to the system. The criteria established to determine the A, or most critical, items was based on demand, casualty reports or emergency requisitions for critical parts, and platform readiness drivers or problematic parts due to their impact on the mission or supply chain reliability (May et al, 2017). B and C items were tiered down from there. This allows the team to focus resources on A items as prescribed by their technique and by the ABC analysis policies, which also prescribes applying a higher level of inventory control, security, and forecasting on A items (Heizer et al, 2017).
These items were chosen, rather than focusing strictly on annual dollar volumes, because of the criticality of their impact to the mission and to the supply chain. This is a combination ABC analysis with the concept of critical success factors, which is defined as “few factors that are critical for the success of a company and they must receive careful and constant attention from managers” (Mohamed Syazwan, Abu Bakar, and Ai, 2015, para. 1).
Heizer, J., Render, B., & Munson, C. (2017). Operations management: Sustainability and supply chain management (12th ed.). Boston: Pearson.
Luster, K. (2019, May 7). NAVSUP Weapon Systems Support Ensures Warfighter Readiness Through End-to-End Supply Chain Management. Retrieved from https://scnewsltr.dodlive.mil/2019/05/07/navsup-weapon-systems-support-ensures-warfighter-readiness-through-end-to-end-supply-chain-management/.
May, B., Atkinson, M., & Ferrer, G. (2017). Applying inventory classification to a large inventory management system. Journal of Operations and Supply Chain Management, 10(1), 68–86. https://doi.org/10.12660/joscmv10n1p68-86.
Mohamed Syazwan, A. T., Abu Bakar, A. H., & Ai, C. T. (2015). Critical success factors of supply chain management: A literature survey and pareto analysis. EuroMed Journal of Business, 10(2), 234-263. doi:http://dx.doi.org.csuglobal.idm.oclc.org/10.1108/E…