Balance service.
Release working capital.
Explore how replenishment quantity and safety stock change average inventory and annual carrying cost. Inputs are planning assumptions, not optimized recommendations.
SKU and policy inputs
MOQ is a constraint. Replenishment quantity is the actual assumed batch size and must meet or exceed MOQ. Safety stock is entered directly; the model does not infer a service level.
Reduction in average inventory value; negative means additional investment.
Current vs. proposed
| Measure | Current | Proposed |
|---|
Calculation assumptions
Average cycle stock = replenishment quantity ÷ 2. Average on-hand inventory = cycle stock + safety stock. Inventory value = average on-hand × unit cost. Annual carrying cost = inventory value × carrying rate. Annual replenishment frequency = annual demand ÷ replenishment quantity (long-run estimate). Inventory days = average on-hand ÷ average daily demand. Reorder point = average daily demand × lead time + safety stock.
Assumes steady demand, fixed batch sizes, 365 days per year and a stable lead time. Excludes pipeline inventory, seasonality, stockouts, volume discounts, ordering costs and implementation costs. Carrying rate may include noncash costs; carrying-cost reduction is not necessarily cash savings. Working capital release is a one-time modeled inventory reduction, not annual profit. Validate safety stock against demand and lead-time variability and service requirements before implementation. Zero demand shows no replenishment frequency or inventory-days estimate.