CLASSROOM SOFTWARE FOR “ABC” ANALYSIS Developments In Business Simulation & Experiential Exercises, Volume 17, 1990 216 CLASSROOM SOFTWARE FOR “ABC” ANALYSIS Clyde Kenneth Walter Iowa State University ABSTRACT This paper describes a personal computer program developed for teaching the inventory control technique known as ABC analysis. BACKGROUND The ABC system of inventory control was developed in 1951 by H. Ford Dickie of General Electric, and has become a standard quantitative application in manufacturing and distribution. While Materials Requirements Planning and Just-In-Time have received more attention recently, these techniques apply to manufacturers with scheduled demands. The less trendy ABC system still applies to the vast majority of businesses that are wholesalers and retailers having unscheduled demands The three A-B-C categories are based on Pareto's Law (frequently called the “80-20 Rule”), which separates the “trivial, many” from the “vital few. While the partitions are somewhat arbitrary, one reasonable breakdown might show the A category as the 20 percent of the total items carried which contribute the top 80 percent of sales, B items as the 40 percent of the inventory lines that produce the next 15 percent of sales, and the remaining 5 percent of sales would be from C items, the final 40 percent of the inventory lines. Given finite storage space and limited funds for purchasing inventory, an organization would be better able to focus its efforts in satisfying the greatest number of demands for materials it normally provided if it stocked more of the A items, fewer of the B items, and fewer still of the C items. A strict ranking may relegate some products important to the sale of A items to the lower categories. Batteries for portable radios and film for cameras are examples of complementary products with one being a large revenue producer only if its companion product is available to make it operative and useful. The original rankings may be adjusted by multiplying them by a judgmental critical value,” designated as A’, B’ or C. Two methods are common. In one, the original rankings are multiplied by 1, 2, or 3, which correspond to the critical values A', B’, and C The resulting values are then ranked and categorized as the ‘adjusted A-B-C’ groups. A simplified variation multiplies critical values such as 1, 2, and 3 (another scheme uses 4, 5, and 6) by the quantified original categories (A = 1, B = 2, C = 3). The results are then ranked again to arrive at adjusted A-B-C categories. PROGRAM DEVELOPMENT AND EXECUTION The A-B-C method has been included in textbooks for production and logistics courses. A typical example would display demand information for a variety of products offered by a firm. Students would then rank the products, usually by revenue produced by each, draw the required graph, and determine where to separate the categories in order to identify the A, B and C items. The calculations, although simple, require some degree of “busy work for both students and faculty. The tabulations and repetitive calculation formed an ideal opportunity for applying computer techniques, and resulted in a 1400 line, Pascal language program called ‘ABC Analysis and Critical Values. ‘ As compiled, the program requires 31372 bytes of disk space and runs on MS-DOS computers. “ABC” reduces calculation errors by providing a format for organizing the inventory and sales data, and by performing all required calculations. The students must still grapple with the basic concept of the Pareto Principle, and determine just what is to be graphed and why specific products are Co be considered A items, B items, and C Items. The executable file (ABC.COM) is run by entering “ABC,” After the title display, the user is prompted by a menu to provide inventory data, consisting of a product name, critical value, unit sales volume, price, and direct cost for up to 15 products. An alternative prompt requests a file name for a user to read in data already stored. “ABC” sorts inventory entries by total revenue, unit sales volume, and total gross margin. The A category is assigned to include the items providing the first 20 percent of specified results, whether revenue, sales, or profit margin. B items will be the next 40 percent, and C items will be the remainder. The two critical value adjustments described above may be selected after any one of the three initial sorts. Three output options are provided at any stage: viewing the data on the screen, saving a named data file, and printing the output at any stage. Additional menu commands allow corrections to errors in data entry. A sub-menu will direct the user for correcting data, deleting a product, clearing the screen of data, or changing the user’s name, APPLICATIONS AND CONCLUSION ABC’ provides a graphic teaching example in a class room setting when the computer output is fed to a liquid crystal display (LCD) panel placed on a standard overhead projector. For lecture halls without built-in computers, a portable unit may be used. Live presentation of “ABC” accomplishes several objectives. First, it allows the teacher to show how a simple product list may be entered (and corrected, when necessary). This activity may help ease the apprehensions of some students who have no prior computer experience. Second, the students will see different sorting routines concurrently with the instructor’s explanation. The third advantage of this on- line presentation is that it is a more efficient; means of teaching than using the blackboard or a “canned’ transparency presentation. The natural extension of the in-class, computer-aided lecture is further individual study. The students are assigned to develop their own lists of products, prices, margins, and critical values, and then perform the sorting routines. As teaching staff and students come to see the advantages of computer presentations coupled with individual assignments, both sides will encourage development of additional programs of the type demonstrated by ‘ABC,’ Table of Contents Volume 17, 1990 The Impact of Decision Support Systems on the Effectiveness of Small Group Decisions - Revisited The Relationship Between Financial Performance and Other Measures of Learning on a Simulation Exercise Use and Effectiveness of an Analogy-Based Expert System Suggestions for Computerized Business Authors Dealing with Power: An Experiential Exercise Using Movie and Personal Diary Analysis Techniques A Model for Developing Student Skills and Assessing Outcomes Through Outdoor Training Computer-Aided Exercises Versus Workbook Exercises as Learning Facilitator in the Principles of Marketing Course An Exposition of Guilford's Si Model as a Means of Diagnosing and Generating Pedagogical Strategies in Collegiate Business Education Formal Planning and Simulation Team Performance: A Cross Sectional Approach Cases: Real Organizations in Real Time in the Classroom An Empirical Investigation of the Internal Validity of Marketing Simulation Game An Empirical Evaluation of the Pedagogical Value of Playing a Simulation Game in a Principles of Marketing Course Factors Affecting Effective Teaching of Strategic Planning: Some Preliminary Evidence An Experiential Exercise for Learning About the Relationship Between Organizational Form & the Project Management Process Accounting Communication Skills can be Taught in the Auditing Course Modeling Cost Functions in Computerized Business Simulation: An Application of Duality Theory and Sheppard's Lemma A Life Cycle Analysis of Decision Making for a Strategic Management Team What's the Problem? A Dynamic Model for Teaching Problem Solving Skills Experientially International Currency Fluctuations: Money$im, A Simulation Superstores: A Specialized Retailing Simulation Within a Specialized Marketing Curriculum Factors Affecting Student Perceptions of Learning in a Business Policy Game VC + EL = VL The Name Game: An Experiential Exercise in Intergroup Relations The Effects of Experiential Accounting Work Experience on Student Performance in Intermediate Accounting Courses The Results of Using the Experiential Activity Group Performance Evaluation in a Business Policy Setting Using a Legal Database to Describe the Legal Environment of Marketing (and Business) Matching Environmental Uncertainty and Organizational Configuration An Instructional Computer Simulation of Tampering in QC Executive Evaluation of Student Learning in the Looking Glass Simulation Group Personality Composition and Total Enterprise Simulation Performance An Expert System for Selecting Analytical Techniques for Analyzing Marketing Research Data Effects of Cognitive Styles on Responses in an In-Basket Simulation A Psychometric Analysis of Kolb's Revised Learning Style-Inventory Selecting and Developing Experiential Exercises Using Movies Application of a Real-World Strategic Management Model in the Classroom Demand Equations which Include Product Attributes Consumption as the Objective in Computer-Scored Total Enterprise Simulations The Effects of Decision Format and Evaluation on Simulation Performance, Decision Time, and Team Cohesion The Effects of Computer Related Assignments on Student Performance in Business Administration The Money Game: A Dynamic Simulation Including Random Shocks for Money and Banking Courses Methods for Evaluating Performance on Business Simulations: A Survey The Effects of Synergogy on the Policy Course: Significant Improvements in Student Learning and Teacher Evaluation Conditions and Outcomes of Trust in a Two-Person Bargaining Exercise Bankgame Enhancing Computer Business Simulation with the Use of VGA Graphics An Experiential Approach to Entrepreneurship An Advanced Simulation Method (ASM) for Multiple Objective Problems The Influence of Experiential learning Techniques on Student Recognition of Non-Primary Learning Styles Negotiating Mergers and Acquisitions: A Cocktail Napkin Approach Identification of Unintended Effects in Experiential Laboratory Exercises An Experimental Comparison of Paper and Pencil and Computer Aided Decision Support Tools Porting a Simulation from the IBM World to the Macintosh World A Transaction Cost Analysis of Experiential Learning The Development of Experiential Exercises for Courses in Entrepreneurship and Small Business Management The Assessment Center as and Experiential Classroom Exercise Pricing Strategy Algorithms for Playing Business Simulations Organizational Structures for International Operations: An Experiential Activity Simulation Emphasis in the Business School Capstone Course An Integrated Approach to Computerizing the Business Curriculum Cross-Cultural Business Negotiations Exercise Organizational Socialization and Gender Differences in Students at Work Understanding Student Work Experience: A Content-Analytic Approach Introducing Executive MBA Programs with Management Games An Analysis of Improvement in Business Decision Outcome with Sequential Use of Two Simulation Games Teaching Business Policy Utilizing Mass Lecture and Individual Case Labs Potholes Along the Road to Evaluating Learning Outcomes: The Case of Outdoor Management Training Experiential Learning for Interior Design Students: Using CADD, Lotus 1-2-3, and Wordperfect Cognitive Learning Using a Computer-Based, Qualitative Interactive Business Simulation Sex Discrimination: Does the Woman get the Job or Does the Best Man Win? A Search for Visual Aids to Support Experiential Learning Through the 1990's An Experimental Analysis fo the Effectiveness of Student Role-Playing in Sales Training How to Have Students Learn from their Term Projects Self-Evaluation Exercise (SEE): An Assessment of Class Contribution A Study of the Influence of Team Formation on Attitudes and Performance in Management Games A Hardware Based CIM Simulation Laboratory Model Test Substance Abuse in Organizations Micro Computer Training Models Teaching Forecasting, Cash Budgeting and Inventory Model Building Using SBTools A Comparison of the Effects of Experiential Learning Activities and Traditional Lecture Classes An Adjunct Writing Instruction Assistant, The Computer; With an Illustration Classroom Software for ABC Analysis Utilizing Information Processing Technology to Enhance the Business Policy Simulation Experience Progressive Cases Realistic Job Previews Vs. Traditional Job Previews: Experiencing the Differences and Understanding the Consequences Investment Analysis Using the Pragmatic Multiplier Approach A Computer Simulation Interface for Competitive and Firm Analysis Self-Assessment of Ethical Decision Making Predispositions Preparing Managers for Overseas Assignments An Inquiry into Japanese Marketing: Workshop on Teaching Japanese Marketing The Performance Appraisal Feedback Interview: A Role Play for Human Resources Management Teaching Counselor Selling techniques Using Experiential Techniques to Teach International Topics International Management Simulation Gaming: Current Status and Future Developments A Realism Comparison of Simulation Technologies/Methodologies A Time-Efficient Game to Illustrate Concepts Taught in Management Courses and Management Development Programs Teaching the Management of Technology The Concept of Face and the Applicability of Experiential Exercises in an Oriental Culture's