Accounting for deficit in ABC-XYZ analysis

This work proposes an ABC-XYZ-type analysis modified with observed merchandise deficit. The deficit is determined by right censoring. This manuscript proposes to account for right censoring in the ABC-XYZ analysis. The modified ABC-XYZ analysis updates many important quantities including projected income, the coefficient of variation, and the Kaplan-Meier estimator. An illustrative example shows that the classical ABC-XYZ algorithm underestimates a merchandise value when deficit was observed; magnitude of the coefficient of variation is also underestimated. The new method corrects this bias and recalculates overall profit and the coefficient of variation.