What is Lorenz curve in SAP MM - Materials Management?

SAP Term: Lorenz curve

• Component: MM

• Component Name: Materials Management

• Description: A method used to represent the distribution of economic magnitudes. In a sample-based physical inventory, the Lorenz curve can be used to graphically display the distribution of stock management units in the stock population, the sampling area, or the complete-count area.

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• Key Concepts: 
  The Lorenz curve is a graphical representation of the distribution of wealth in a society. It is used in Materials Management (MM) in SAP to measure the degree of inequality in the distribution of goods and services. The curve is created by plotting the cumulative percentage of total wealth against the cumulative percentage of population. 
  
  How to use it: 
  In SAP MM, the Lorenz curve is used to measure the degree of inequality in the distribution of goods and services. It can be used to compare different distributions and identify areas where there is a need for improvement. The curve can also be used to identify areas where there is an unequal distribution of resources, which can then be addressed through policy changes or other measures. 
  
  Tips & Tricks: 
  When using the Lorenz curve in SAP MM, it is important to remember that it is only a representation of the distribution of wealth and not an exact measurement. It should be used as a tool to identify areas where there may be an unequal distribution of resources, but not as a definitive measure of inequality. 
  
  Related Information: 
  The Lorenz curve is closely related to the Gini coefficient, which is another measure of inequality. The Gini coefficient is calculated by subtracting the area between the Lorenz curve and a line of perfect equality from one. This coefficient can then be used to compare different distributions and identify areas where there may be an unequal distribution of resources.