Conventionally, a traditional ABC analysis based on a single criterion of annual consumption cost is employed in industry to facilitate classification of inventory items. However, other criteria may be important in inventory classification such as lead time, item criticality, storage cost, etc. Hence, for situations like this many multiple criteria decision-making methods are available and the Analytic Hierarchy Process (AHP) is a popular one. The present article demonstrates a new approach by integrating Graph Theory (GT) and the Analytic Hierarchy Process (AHP) as a decision analysis tool for multi-criteria inventory classification. In this paper, 47 disposable items used in a respiratory therapy unit of a hospital were considered for a case study. Output of this hybrid method shows more precise results than that of either traditional ABC or the AHP classification methods. As the proposed decision analysis tool is a simple, logical, systematic and consistent method, it may be recommended for application in diverse industries handling multi-criteria inventory classification systems.
ABC classification, graph theory, analytic hierarchy process, inventory classification, graph theory-AHP integration, hybrid system
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