K Curve & ABC Analysis for Effective Inventory Management

This report provides an overview of inventory management using the K Curve and ABC analysis methods. The ABC approach categorizes products based on quantity, quality, or function, enabling prioritized inventory control. The K Curve classifies inventory based on order frequency, addressing the limitations of the EOQ model in multi-item inventory systems. The assignment approach involves calculating EOQ and EOP, dividing data into value classes, determining cycle days, calculating average inventory and deliveries, and graphing the K Curve to optimize joint orders.

Inventory
Management
K CURVE & ABC ANALYSIS

ABC
approach
The ABC approach involves separating the products into
categories.
ABC stands for Always Better Control in inventory
management
The inventory is categorized based on quantity, quality or
function and then each level has their own inventory process
This method may give one an idea on which products are
performing well compared to others
It also highlights the need for prioritizing inventory and
having tighter inventory controls for certain items

K curve
The K curve provides a way of classifying inventory based on
the order frequency
In the multi item inventory system, it is assumed that the EOQ
can only satisfy a single item since it may not be possible to
minimize the order cost for multiple items
It may therefore be useful to divide the inventory into classes
for which one can make joint orders using the K curve

Assignment approach
A) The first step involves calculation of the EOQ and EOP by using the number of working days
and the constant K from which we get classes according to the order days
B) We then need to divide the data further into value classes by applying the class limits which
we will then need to apply to the list of parts to get the cycle days
C) We then calculate the average inventory and number of deliveries as per the cycle days
D) We then use the number of orders and the average deliveries to graph the K curve