What is a Min/Max policy? How do you know is working well for you? Smart IP&O gets Min/Max right!
The Min/Max inventory policy is one of four available Replenishment methods in SIO. When the inventory level drops to or below the Min, a replenishment order is generated. The reorder quantity is the number of units needed to raise the stock up to the Max. How do you know your Min/Max settings are working well and triggering replenishment orders at the right time and for the right quantities? If you are like most companies, setting Min/Max levels is based on rules of thumb or simple averaging techniques that don’t expose the trade off curve between service level and inventory cost. This makes it impossible to predict which items are likely to have overstocks and shortages in the future. In this Video Blog we elaborate on this and describe how Smart Inventory Optimization can help.
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Goldilocks Inventory Levels
You may remember the story of Goldilocks from your long-ago youth. Sometimes the porridge was too hot, sometimes it was too cold, but just once it was just right. Now that we are adults, we can translate that fairy tale into a professional principle for inventory planning: There can be too little or too much inventory, and there is some Goldilocks level that is “just right.” This blog is about finding that sweet spot.
Call an Audible to Proactively Counter Supply Chain Noise
You know the situation: You work out the best way to manage each inventory item by computing the proper reorder points and replenishment targets, then average demand increases or decreases, or demand volatility changes, or suppliers’ lead times change, or your own costs change.
An Example of Simulation-Based Multiechelon Inventory Optimization
Managing the inventory across multiple facilities arrayed in multiple echelons can be a huge challenge for any company. The complexity arises from the interactions among the echelons, with demands at the lower levels bubbling up and any shortages at the higher levels cascading down.
Recent Posts
Smart Software to Present at Epicor Insights 2022Smart Software CEO will present at this year's Epicor Insights event in Nashville. If you plan to attend this year, please join us at booth #9 and #705, and learn more about Epicor Smart Inventory Planning and Optimization. […]
Smart Software and Arizona Public Service to Present at WERC 2022Smart Software CEO and APS Inventory Manager to present WERC 2022 Studio Session on implementing Smart IP&O in 90 Days and achieve significant savings by optimizing reorder points and order quantities for over 250,000 spare parts. […]
