Various methodology used in managing and optimizing inventory.

1. Inventory Optimization Techniques
Sugyan Panda
27 Feb 2019

2. Agenda
What is inventory optimization
Why inventory optimization
Various Methodology of optimizing inventory

3. Inventory optimizationis the provision of the right inventory, in the right quantities and
at the right locations, to meet the supply and demand of parts and materials in the enterprise

4. Why Inventory Optimization
Directly affects working capital
Shrinking product lifecycle
Customer Service Level
Changes in buying behavior

5. Methodology
EOQ
Reorder point
ABC Analysis
JIT
Safety Stock
Consignment Inventory
DropShipping
Min-Max Planning
Demand Forecasting

6. There is a tradeoff between holding costs and ordering costs
Order Quantity (Q*)
Cost
Total cost
Holding costs
Ordering costs
EOQ

7. Reorder Point

8. ABC Analysis

9. JIT (Just In Time)

10. Safety Stock

11. Consignment Inventory

12. Drop Shipping

13. Min-Max Planning

14. Demand Forecasting
• Top Down
• Bottom Up
• Opinion
• Statistical Method

15. Appendix
https://www.scmr.com/article/how_inventory_optimization_opens_pathways_to_profitability
https://en.wikipedia.org/wiki/Inventory_optimization
https://www.manufacturing.net/article/2015/11/12-best-practices-inventory-optimization
https://www.logisticsmgmt.com/article/how_inventory_optimization_opens_pathways_to_pr
ofitability