Inventory Planning and Management

Inventory investment requirements, costs, and plans play a central role, either directly or indirectly, in most major logistics decisions and strategies. For example, in Chapter 2 , we illustrated the importance of integrating inventory considerations into long-run transportation mode choice strategies. We also reviewed that the number of DCs serving a market impacts a firm’s total inventory investment requirements, and this directly affects the total warehouse square footage and/or cubic footage required network-wide for inventory storage. In this chapter, we now focus directly on inventory planning and management. We begin with a review of basic concepts and measures that underlie inventory analytics, planning, and strategy. Next, we discuss a series of analytic planning techniques frequently utilized by supply chain professionals to monitor and manage their firms’ inventories both day-to-day and long-term. The topics studied include product line structures that facilitate inventory planning, ABC inventory classification schemes, creating visibility internally within a company to its inventory levels, trade-offs to consider between investment levels in finished and non-finished good inventory, and inventory replenishment systems.