Generating ABC analysis

Generate ABC analysis to create an ABC analysis report for reference purposes and/or to update the class assignments for part.

ABC inventory analysis is an inventory method that enables you to divide your stock inventory items into three groups or classes: A, B, and C. ABC class assignments are used as selection criteria for a number of material management functions, such as EOQ calculations, stock replenishment, repairable spares, and physical inventory counts.

To generate ABC analysis, enter a percentage value as the cutoff point for each of the three classes. The system then assigns parts to one of the ABC classes by comparing the part’s value to the value of other parts. Parts assigned to class A represent the largest percentage of your total inventory value. Parts assigned to class B represent a moderate percentage of your total inventory value. Parts assigned to class C represent a small percentage of your total inventory value.

Depending on your preference, the system determines a part’s ABC class based on either part value or part usage value. The system arranges the parts in descending order so that the part with the largest Percentage of Value is first, with other parts following in descending order according to their Percentage of Value. The system then assigns a class to each part based on the percentages specified for A Cutoff Point %, B Cutoff Point %, and C Cutoff Point %.

Note: The system determines part value percentages using the Price Type specified for each part. The system enables you to perform ABC Analysis for reference purposes without affecting the current class assignments of a store’s parts, or you can click Update ABC Class to automatically update part ABC classes.

To generate ABC analysis:

Open the Generate ABC Analysis form.
Organization—Enter the organization for which to generate ABC analysis if you use multi-organization security.
Store—Enter store for which to perform ABC analysis.

Note: You can also enter "wildcards" for Store necessary to generate data. If you know all but one character, you can enter the characters you know, and substitute _ for the unknown character. If you only know a portion, you can enter the portion of the parameter that you know, and substitute % for the remaining portion. For example, if you enter P% for Store, the system retrieves all stores that begin with the letter "P." If you enter %PIP% for Store, the system retrieves all stores with codes that include the letters "PIP."
A Cutoff Point %—Enter the value of the cutoff point for A. The system automatically enters 70 as the default value.
B Cutoff Point %—Enter the value of the cutoff point for B. The system automatically enters 20 as the default value.
C Cutoff Point %—Enter the value of the cutoff point for C. The system automatically enters 10 as the default value.

Note: The sum of the values entered for A Cutoff Point %, B Cutoff Point %, and C Cutoff Point % must equal 100%, and you must enter a value for all three points.
Select one of the following options:
- Usage Based—Select to calculate ABC analysis based on usage. If you select Usage Based, the system displays the Quantity as the number of parts issued from the store minus the returns to store. The system calculates Total Value as the product of the Price and the Quantity. The Cumulative Percentage and ABC Class are determined based on the usage value for the part rather than the value on hand.
- Value Based—Select to calculate ABC analysis based on values. If you select Value Based, the system displays the Quantity as the number of parts currently on hand in the store. The Total Value is the product of the Price and the Quantity. The Percentage of Value, Cumulative Percentage, and ABC Class are determined by the actual value of the parts currently in stock. The system arranges the parts so that the part with the largest percentage of total inventory value is on top with other parts following in descending order according to their percentage of total inventory value.
Print ABC Analysis—Select to print an ABC analysis report.
Click Process. The system displays the Preview page listing all of the parts for which to generate ABC analysis.
Select each part line for which you wish to generate ABC analysis. The system automatically selects all of the part lines. You may remove individual lines from the list by unselecting the line. The system does not update the class assignments for unselected lines.

Note: To select all the parts at once, check Select. To unselect all the parts at once, uncheck Select.
Print ABC Analysis—Select to print an ABC analysis report.
Click Update ABC Class to update the class assignments for parts. The system updates the class assignments and stores the calculated values for each selected part record in the R5STOCK table. If any errors occur during the updates, the system highlights the record in red and displays the error in Error Message.