Frequently Asked Questions

Inventory Planning FAQ’s

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FAQs

Inventory FAQs

  • How can safety stock be calculated effectively in inventory management?

    Safety stock can be calculated using various methods, each tailored to specific inventory management needs. One common approach involves statistical analysis, such as determining the standard deviation of demand or lead time. By understanding the variability in demand and lead time, ...

  • What factors determine whether a stock-keeping unit (SKU) should follow Make-to-Stock (MTS) or Make-to-Order (MTO) strategies?

    The decision to adopt Make-to-Stock (MTS) or Make-to-Order (MTO) strategies for a stock-keeping unit (SKU) hinges on various factors that influence production and inventory management. Items with stable and predictable demand patterns are well-suited for MTS, as production can be planned ...

  • What methods exist to reduce inventory wastage, and how do they contribute to minimizing losses?

    Inventory wastage, arising from factors like overstocking, obsolescence, spoilage, and shrinkage, poses challenges to profitability. To address these risks, businesses employ strategies in inventory management. Demand forecasting aligns inventory levels with actual demand, while efficient techniques like just-in-time (JIT) systems streamline ...

  • How do you determine the optimal sourcing location when ordering products for inventory replenishment?

    The optimal sourcing location for ordering products depends on factors like supplier reliability, lead times, transportation costs, quality considerations, and geopolitical factors. Supplier evaluations help identify reliable vendors, while analyzing total landed costs determines cost-effectiveness. Proximity to markets and geopolitical stability ...

  • What are the repercussions of lacking inventory visibility in supply chain management?

    Lacking inventory visibility in supply chain management can lead to a range of negative consequences that impact operational efficiency, customer satisfaction, and overall business performance. Without real-time visibility into inventory levels, locations, and movements, businesses may experience stockouts, overstocking, and inaccurate ...

  • What strategies can be employed for managing declining demand for a product in inventory management?

    Managing declining demand for a product requires proactive inventory management strategies aimed at minimizing inventory holding costs and maximizing profitability. One approach is to implement promotional activities, such as discounts or bundle offers, to stimulate demand and encourage sales. Adjusting pricing ...

  • How is inventory aging calculated, and how is this information utilized to prevent obsolescence?

    Inventory aging is calculated by analyzing the age of individual inventory items based on their time in stock, typically measured in days, weeks, or months. This information is used to categorize inventory items into different age brackets, such as current, aged, ...