Improve Forecast Accuracy, Eliminate Excess Inventory, & Maximize Service Levels
In this Video Dr. Thomas Willemain, co–Founder and SVP Research, talks about forecast-based inventory management policy, also known as MRP logic. This is the fourth in our series on major approaches to managing inventory. We begin by looking at some very simple and then more robust models of inventory dynamics that help us determine how much to order or manufacture and when. We then consider how to calculate lead time and account for lead time variability. Tom concludes by describing the importance of safety stock, it’s role in properly buffering against demand and supply uncertainty, and how best to calculate it.
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Forecast-Based Inventory Management for Better Planning
Forecast-based inventory management, or MRP (Material Requirements Planning) logic, is a forward-planning method that helps businesses meet demand without overstocking or understocking. By anticipating demand and adjusting inventory levels, it maintains a balance between meeting customer needs and minimizing excess inventory costs. This approach optimizes operations, reduces waste, and enhances customer satisfaction.
![Make AI-Driven Inventory Optimization an Ally for Your Organization](https://smartcorp.com/wp-content/uploads/2024/07/Make-AI-Driven-Inventory-Optimization-an-Ally-for-Your-Organization-1-1080x675.jpg)
Make AI-Driven Inventory Optimization an Ally for Your Organization
In this blog, we will explore how organizations can achieve exceptional efficiency and accuracy with AI-driven inventory optimization. Traditional inventory management methods often fall short due to their reactive nature and reliance on manual processes. Maintaining optimal inventory levels is fundamental for meeting customer demand while minimizing costs. The introduction of AI-driven inventory optimization can significantly reduce the burden of manual processes, providing relief to supply chain managers from tedious tasks.
![The Importance of Clear Service Level Definitions in Inventory Management](https://smartcorp.com/wp-content/uploads/2024/07/The-Importance-of-Clear-Service-Level-Definitions-in-Inventory-Management-FHD-1080x675.jpg)
The Importance of Clear Service Level Definitions in Inventory Management
Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.