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Consumer Goods Inventory Planning

Retail manages and sells finished goods that the retailers think will sell. There are usually a very large number of different products, particularly with distinctions such as size, color, and style. Demand can be reasonably steady, as with food and hardware or highly seasonal, as with clothes. For steady demand items, retailers tend to set an order point and order quantity. For example, whenever the number of an item in stock goes below 3, order 12 more.

For seasonal items, retailers usually buy the items from suppliers before the season, and there is seldom a chance for replenishing stocks mid-season if the item is a big seller. Experienced fashion buyers may earn their salaries by predicting what items will sell in what quantities in a region and even by store.

Retail Challenges

  • Difficulty in manually setting min and max levels
  • Forecasting future demand
  • Stock-outs of key items
  • Category management
  • Low inventory turns on a majority of items
  • Excess and obsolete inventory
  • Wrong mix of inventory items
  • Continually changing customer preferences
  • Manual processes for determining what to stock, how much, when to order, and where to place it
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