How This Workflow Works
This workflow analyzes historical demand and fulfillment data to classify inventory items using the ABC model and calculates key inventory metrics, including safety stock, reorder point, and economic order quantity. It allows users to adjust service level targets, tailoring safety stock recommendations to their risk tolerance.
Key Features:
- Categorize inventory items by value contribution using the ABC model
- Calculate safety stock based on user-defined service levels
- Determine optimal reorder points and economic order quantities
- Generate clear reports for review and sharing
Step-by-step:
1. Classify Inventory by Value Contribution:
The workflow aggregates order data by item, calculates the total value for each SKU, and ranks items according to their cumulative value contribution. It then assigns each item to a category (A, B, or C) based on established thresholds, helping you focus on the most impactful inventory.
2. Calculate Safety Stock Based on Service Level:
Using historical demand variability and lead time, the workflow computes safety stock for each item. You can set your desired service level, which adjusts the safety stock calculation to reflect your preferred balance between stockouts and holding costs.
3. Determine Reorder Points and Economic Order Quantities:
With safety stock values in place, the workflow calculates the reorder point for each item, ensuring timely replenishment. It also computes the Economic Order Quantity(EOQ), optimizing order sizes to minimize total inventory costs.
4. Visualize and Share Insights:
The workflow compiles results into a structured report, presenting categorized items and calculated KPIs in a clear format. This report can be exported for review or distribution, supporting informed inventory management decisions.