15 November 2009
Inventory 101 – Balancing Stockout and Holding Costs
Ever been caught between a rock—fear of stocking out—and a hard place—determination not to carry more inventory than is absolutely necessary. Well, most inventory managers have been there— wanting to carry enough inventory to guard against excessive stock outs, but hoping not to carry so much inventory that carrying cost and obsolescence become concerns. Rest assured there are ways to balance customer service levels with concerns about carrying cost.
First, you may consider shortening replenishment lead times. With shorter lead times, there is less variability in expected demand and, therefore, less risk of stocking out during the replenishment cycle.
Next, review the frequency of your replenishments. Increasing the number of orders placed will effectively reduce the amount of inventory required on hand.
Lastly, consider improving your forecasting methods; smaller MAPEs (mean absolute percentage errors) require less safety stock coverage.
Try these few techniques to manage better both stockout costs and inventory holding costs.
Posted by: Tamboura Gaskins at 15 November 2009 2:28 pm | Category: Inventory Management | Tags: carrying costs, forecasting, inventory, replenishment, stockout costs
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Je ne suis pas habitué de laisser des commentaires sur les articles mais cet article est vraiment bien. Bonne continuation !
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