Formulas

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1 PERFORMANCE – PARETO OR ABC ANALYSIS To solve this type of exercise they usually give me two thresholds, one for class A and one for class B. the threshold for class A is lower than the threshold of class B because we work with the cumulative. Depending on the data that I have I need to create different tables: • Option 1: I have the annual consumption and the unit cost = in this case I must create two tables. In the first one I put all the data that I have, and I compute the value of the annual consumption. Then in another column I reorder the items from the one that has the maximum value of the annual consumption to the lower one. Then, thanks to the thresholds I can identify the different class 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛= 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 ∙ 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 ITEM or MATERIAL ANNUAL CONSUMPTION [PCS] UNIT COST [€/PCS] VALUE OF THE ANNUAL CONSUMPTION [€] ORDERED ITEM or MATERIAL IN ORDERED VALUE OF THE ANNUAL CONSUMPTION [€] CUMULATIVE [€] PERCENTAGE OF THE CUMULATIVE CLASSIFICATION • Option 2: I have the unit value, the stock and the consumption. In this case the steps to follow are more than the previous case: a. We need first of all to determine both the value of the consumption and the stock. Then I need to compute the index turnover as the ration between the consumption value and the stock value because this value will be useful in the final consideration 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑣𝑎𝑙𝑢𝑒= 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 ∙ 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 𝑠𝑡𝑜𝑐𝑘 𝑣𝑎𝑙𝑢𝑒= 𝑠𝑡𝑜𝑐𝑘 ∙ 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 𝑖𝑛𝑑𝑒𝑥 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟= 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑣𝑎𝑙𝑢𝑒 𝑠𝑡𝑜𝑐𝑘 𝑣𝑎𝑙𝑢𝑒 ITEM or MATERIALE UNIT VALUE [€/PCS] STOCK [PCS] CONSUMPTION [PCS] CONSUMPTION VALUE [€] STOCK VALUE [€] INDEX TURNOVER b. We need now to do the ABC analysis separately on the consumption and the stock. Let’s start form the consumption. We need to organize the consumption value and then to…