Guidelines for Performing ABC Assignments
Use the Perform ABC Assignments page to draw dividing lines on your ABC classification set items, dividing them into classes based on the ABC classification set criteria for the purpose of counting and reporting. You have options on how to differentiate the different item classes.
You can assign and update ABC classes to an ABC assignment group where an ABC classification set was also entered. You can use the ABC Classification Set Items report to assign items to ABC classes and to decide which value (sequence, inventory, item percentage, or value percentage) to specify as the cutoff point of an ABC class. You can then use the classifications for other purposes such as determining how often you cycle count a given item.
On the Perform ABC Assignments page, the fields not specified by you are dynamically calculated. The values for the last ABC class are automatically calculated when you specify a value for the second to last ABC class.
Here are the important options for the ABC Assignment Criteria table on the Perform ABC Assignments page:
| Field | Description |
|---|---|
| Sequence |
The sequence assigned to the item on the classification set. Entering the item’s sequence here means that every sequence before the value entered here is Class A. The cumulative Inventory Value and Item Percentage default for all Class A items up to this sequence. If a customer enters another sequence for Class B. All items after Class B default to Class C. The last class in the ABC assignment group defaults to the last sequence in the ABC classification set. |
| Inventory Value |
The inventory value of the item on the ABC classification set. Entering the item’s inventory value here means every item with an inventory value before what’s entered here is Class A. The corresponding classification set Sequence and cumulative Item Percentage default for all Class A Items up to this inventory value. If a customer enters another inventory value for Class B, all items after Class B default to Class C. The last class in the ABC assignment group defaults to the last sequence in the ABC classification set. |
| Item Percentage |
The percentage of total items on the ABC classification set. For example, entering 10 here means the first 10% of the items on the ABC classification set are Class A. The corresponding classification set Sequence and cumulative Inventory Value default for all Class A items up to this item percentage. If a customer enters another item percentage for Class B, all items after Class B default to Class C. The last class in the ABC assignment group defaults to the last sequence in the ABC classification set. |
| Value Percentage |
The percentage of the total value of the items on the ABC classification set. For example, entering 10 here means 10% of the items starting with the highest value are assigned to Class A. The corresponding classification set Sequence, cumulative Sequence, cumulative Item Percentage, and Inventory Value default for all the class A items up to the items designated in the 10%. Example: When the ABC classification set is run with criteria involving the value (on-hand value, item cost, usage value, and so forth), then along with the quantity and cumulative quantity, we will also have ABC classification set value and cumulative value. So, say the total cumulative value for all items is 100,000 USD. Now the user can specify that 10% of the top items by value fall in class A. So, the UI determines the number of sequences that fall within the cumulative value of 10,000 USD (10% of 100,000). And this sequence and other values default. |
Rounding
Based on the percentages entered on the ABC Assignments page, the calculation can result in a decimal number. That decimal number is then rounded up to perform the calculations.
For example, say the number of items in the ABC classification set is 115 and you want the top 10% of items to belong to class A. With this, the number of items are calculated for the top 10%, which comes out to 11.5 items (sequence). Now to make sure we have an integer number of items (sequences) included in the class, the sequence is rounded up to 12. Once the sequence changes to 12, the percentage is recalculated. In this case it recalculates to: (12/115)*100=10.43.
So, you can specify the ABC Assignment criteria in any way (using Item Percentage or Inventory Value), but all of this drives the actual items to be included in that class for which the sequence is calculated. And if that sequence is a fraction, it’s rounded up. And once it rounds up, the other values are recalculated.