Logistics and Supply Chain Management, 4th Edition

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

50

value. If appropriate a ‘weight’ could be assigned on the basis of criticality and the

80/20 ranking based on profit could be adjusted accordingly. Table 2.2 provides

an example.

Table 2.2 Critical value analysis

Products Profitability

rank order

Critical value to

customers

1 2 3

Rank ×

Critical

value

Order of

priority for

service

C 1 x 3 1

P 2 x 4 2 =

R 3 x 6 5

B 4 x 4 2 =

X 5 x 5 4

Y 6 x 18 8

Z 7 x 14 7

H 8 x 8 6

J 9 x 27 10

K 10 x 20 9

Critical values: 1 = Sale lost

2 = Slight delay acceptable

3 = Longer delay acceptable

Setting service standards

Obviously if service performance is to be ...