Safety Stock & Re-order points – simple explanation

Safety stock is the additional number of units of stock held by a company to mitigate several market risks. Without safety stocks, the company could have negative customer experience, lost revenue, lost market share and long-term customer value. However, a higher safety stock strains the organization in the form of higher working capital requirement. Safety …

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ROI of a distributor or supplier – business turnover, margins and rotations (in e-commerce and FMCG)

Retail excites me a lot because it is a simple business of buying and selling goods and yet it covers almost every complexity under the sun. It has a complex supply chain from raw material to finished goods, yet seeming so simple and convenient when we add items to our shopping cart in offline and …

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EOQ: How much inventory to buy? – to stock or not to stock that inventory

Retail Managers are responsible to ensure stock availability to customers by replenishing stocks regularly. At the same time, they are also responsible for profitability of their category or division, leading to questions on - whether we should carry that product and how much inventory should we carry on hand? This is where it gets interesting. …

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Ways To Reduce Inventory and Improving Service

This post is originally written by Chuck LaMacchia and the link to the original post is here. Ten Ways to Reduce Inventory, While Maintaining or Improving Service “Our competitor turns its inventory six times per year, but we’re only at four. We should be able to turn our inventory six times as well!” says the …

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Inventory Management, Inventory Costs, Newsvendor vs. EOQ

Different models are used to manage inventory for products that are continually available (like milk) or products available for limited time (like seed).The Economic Order Quantity (EOQ) model determines the least cost level of inventory to carry, as well as costs. News Vendor models are used for products only available for a single period. EOQ …

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