Multi-criteria ABC classification is a useful model for automatic inventory management and optimization. This model enables a rapid classification of inventory items into three groups, having varying managerial levels. Several methods, based on different criteria and principles, were proposed to build the ABC classes. However, existing ABC classification methods operate as black-box AI processes that only provide assignments of the items to the different ABC classes without providing further managerial explanations. The multi-criteria nature of the inventory classification problem makes the utilization and the interpretation of item classes difficult, without further information. Decision makers usually need additional information regarding important characteristics that were crucial in determining the managerial classes of the items because such information can help managers better understand the inventory groups and make inventory management decisions more transparent. To address this issue, we propose a two-phased explainable approach based on eXplainable Artificial Intelligence (XAI) capabilities. The proposed approach provides both local and global explanations of the built ABC classes at the item and class levels, respectively. Application of the proposed approach in inventory classification of a firm, specialized in retail sales, demonstrated its effectiveness in generating accurate and interpretable ABC classes. Assignments of the items to the different ABC classes were well-explained based on the item’s criteria. The results in this particular application have shown a significant impact of the sales, profit, and customer priority as criteria that had an impact on determining the item classes.
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This content will become publicly available on January 17, 2025
Voluntary environmental effort under ( s , S ) inventory policy*
Prior research on inventory control has been wide ranging, yet the environmental implications of an (s,S)
inventory policy remain uninvestigated. This paper seeks to bridge the gap by characterising a firm’s voluntary environmental policy in the setup of an (s,S)
inventory control policy. We suggest a mixed model structure wherein, due to the presence of fixed production costs, the inventory is determined continuously by sales and impulsively with ordering decisions obeying an optimal stopping process, while the uncertain sales process is controlled by continuous-time environmental goodwill-related decisions. We show that a firm should successively use voluntary environmental efforts to stimulate its sales when there is inventory and to increase backlogging to improve its production efficiency. Given the recurrent pattern of this policy, we conclude that voluntary environmental efforts under an (s,S)
inventory control is not compatible with using these efforts as a means to generate ephemeral reputation insurance.
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- Award ID(s):
- 2204795
- NSF-PAR ID:
- 10522009
- Publisher / Repository:
- Taylor and Francis
- Date Published:
- Journal Name:
- International Journal of Production Research
- Volume:
- 62
- Issue:
- 1-2
- ISSN:
- 0020-7543
- Page Range / eLocation ID:
- 522 to 535
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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