Datasheet

Thursday, 17 July 2003 MiniProject: Design Aspects Colin K McCord
EEE512J2 – Electronic Product Design Page 21 Chapter 4: Project Planning and Management
Development costs: -
4.2. Pareto Concept
The Pareto principle states that there are a ‘critical few and trivial many.’ This concept can be applied to
inventory management using ABC analysis and cost estimating (a small number of elements have a large
effect on the total cost of project).
20% 60% 100%
60%
90%
100%
% No. of Components
% Product Cost
Class A
Class B
Class C
Figure 4.2a. Pareto Curve
ABC Analysis divides on-hand inventory into 3 classes, A class, B class and C class. Basis is usually annual
£ volume (£ volume = Annual demand x Unit cost).
Class A (say 20% of items): -
• Develop class A suppliers more.