Straight-Average ABOM Method: Steps to Build and Calculate a Straight-Average ABOM

The steps needed to build a straight-average ABOM are similar to that of the weighted-average method described above. However, it could be less accurate if the representative samples within your ABOM are of considerably different weights and sales volumes. Therefore, if you decide to utilize the straight average-average method, CSSA encourages you to ensure that the weights of the representative samples’ packaging within your ABOM group are reasonably similar to one another.

Step 1: Identify products with like-packaging  and like-weights.

Using the same example as above, let’s assume your company is obligated to report for approximately 100 SKUs of cereal in boxes ranging from 250g to 750g in size. Even though there are several varieties of cereals in several sizes of cereal boxes, all the packaging is composed of the same materials: a Boxboard outer box and an inner liner made from Plastic Laminate.

Step 2: Choose a representative sample of products.

Within your 100 SKUs of cereal boxes, you observe that there are 10 different sizes of boxes. Six of them fall into what you consider “large;” four of them are “medium.” Within the medium group below, you identify one of the boxes as a good representative sample (the circled box below will become your Sample A). You will apply the same principle of observation to select the best sample for the large sized group.

You now have two sample products: Sample A which represents the various cereal boxes in the medium sized group, and Sample B which represents the various cereal boxes in the large sized group.

Step 3: Record the weight of A and B for each of the obligated materials, in this case Boxboard and Plastic Laminates.

You’ve recorded that A’s Boxboard weighs 63.8 g while B’s weighs 98.8 g. For Plastic Laminates, A’s weighs 9.3 g while B’s weighs 11.7 g.

Step 4: Determine the straight-average for each packaging material.

For each packaging material, take the sum of each of your sample’s weights and divide by the number of samples in the ABOM. For example, (63.8 g + 98.8 g)/2 = 81.3 g.

Step 5: Multiply the straight-average weight of each material that you obtained in Step 4 by the number of units sold that are grouped in ABOM 1.

For Boxboard:

  • Multiply the straight average weight of 81.3 g by the number of units sold, 500,000 – You should arrive at 40,650,000 g or 40,650 KG as the amount to report for Boxboard.

For Plastic Laminates:

  • Multiply the straight average weight of 10.5 g by the number of units sold, 500,000.
  • You should arrive at 5,250,000 g or 5,250 KG.