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Inventory planning involves using forecasting techniques to estimate the inventory required to meet consumer demand. [ 1 ] [ 2 ] [ 3 ] The process uses data from customer demand patterns, market trends , supply patterns, and historical sales to generate a demand plan that predicts product needs over a specified period.
According to an October 21, 1996 Business Week article entitled Clearing the Cobwebs from the Stockroom, New Internet software may make forecasting a snap, "Benchmarking developed CFAR with funding from Wal-Mart, IBM, SAP, and Manugistics. The latter two are makers of accounting and supply chain management software, respectively.
Field inventory management, commonly known as inventory management, is the task of understanding the stock mix of a company and the handling of the different demands placed on that stock. The demands are influenced by both external and internal factors and are balanced by the creation of purchase order requests to keep supplies at a reasonable ...
By integrating accurate demand forecasting with inventory management, rather than only looking at past averages, a much more accurate and optimal outcome is expected. Integrating demand forecasting into inventory management in this way also allows for the prediction of the "can fit" point when inventory storage is limited on a per-product basis.
The standard technique requires that inventory be valued at the standard cost of each unit; that is, the usual cost per unit at the normal level of output and efficiency. The retail technique values the inventory by taking its sales value and then reducing it by the relevant gross profit margin.
Inventory optimization refers to the techniques used by businesses to improve their oversight, control and management of inventory size and location across their extended supply network. [1] It has been observed within operations research that "every company has the challenge of matching its supply volume to customer demand.
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