Inventory Planning

Inventory planning is the process by which companies manage inventory to achieve:

  • Quality: Products are kept in good condition. Perishable items are not kept too long.
  • Speed: Optimal inventory location enables faster response to customer requests.
  • Dependability: Risk of stock-outs are minimal.
  • Flexibility: The company can continue responding to customer requests even as it switches to new products.

Adapted from Operations Management (4th Ed, Pearson).

Advanced-analytic forecasting optimizes inventory management in part by balancing the costs of holding too much inventory (facility, spoilage, loss, etc.) with the cost of holding too little inventory (lost sales & customers, missed production schedules, etc.). Inventory optimization finds and maintains optimal safety stock levels, reorder levels, order quantities, service levels, fill rates, and more.