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What's the difference between XYZ and ABC inventory?
To solve this problem, I decided to add a second dimension to inventory classification, that I call XYZ based on the variability of demand. Items are classified in a matrix with ABC classification in one axis and XYZ in another axis.
How is the variability factor calculated in XYZ?
The XYZ classification is based on the standard deviation of the demand (I use frequently -6 periods in the past, +6 periods in the future). The variability factor is calculated as a percentage dividing the standard deviation (SD) by the total demand/consumption (TD) for the same period.
How are items classified in ABC and XYZ?
Items are classified in a matrix with ABC classification in one axis and XYZ in another axis. The XYZ classification is based on the standard deviation of the demand (I use frequently -6 periods in the past, +6 periods in the future).
Last Update: Oct 2021
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