Explanation : Inventory Planning aims at optimizing inventory levels. The aim of inventory optimization is to reduce the holding and maintenance costs, without neglecting the customer satisfaction level. In other words, inventory optimization helps to reduce inventory while improving service level.
How do you optimize inventory levels?
10 Ways to Optimize your Inventory
- 1) Establish Supply Chain KPIs. ...
- 2) ABC Analysis.
- 3: Clean obsolete stocks.
- 4: Reduce the number of references.
- 5: Accept out-of-stock on low sales.
- 6: Improve sales and purchase forecasts.
- 7: Reduce your MOQ (Minimum Order Quantity)
- 8: Reduce your supplier lead times.
Why is it important to optimize inventory?
Optimising your inventory allows you to reduce working capital (by reducing unnecessary inventory buffers) and improve your service level. It ensures that you get your customers what they want, when they want it - without holding too much inventory.
