Increasing the level of inventory control at the stock-keeping unit level is a prerequisite for optimizing their levels. We speak of an optimal inventory level when an optimal level of customer service is also achieved at the minimum inventory cost.
An excessively high inventory level means unnecessarily incurred costs, while an excessively low one means lost sales opportunities. Hence, it is essential to establish appropriate logistics parameters that define the inventory management policy.
Establishing an inventory management policy is a tactical issue. Therefore, decisions related to determining logistics parameters should be verified with appropriate frequency, taking into account both seasonal fluctuations in turnover and the rate of business growth.
The optimization of inventory levels in a tactical sense is influenced by constraints resulting from the availability of warehouse space, as well as established delivery terms.
The article comes from the magazine “Logistyka” 1/2003.