Inventory Management : Forecasting And Replenishment

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Inventory Management: Forecasting and Replenishment Efficiently managing the supply chain flow between the vendor and the client plays a critical role in effective supply chain management. Systematic and methodical inventory management and forecasting are pivotal in the supply chain operation. Demand and timing coincide for optimal forecasting. One needs to understand the customer needs and determining the forecasted quantities. Guesswork and hope is not the answer. “As the term suggests, forecasting is making an informed prediction about placing an order. Using forecasting models such as determining reorder points and economic order quantities can help ensure optimal inventory control.” (“What is Inventory Forecasting,” 2016).…show more content…
Cyclical component fluctuates around the trend, excluding irregular components. The part of the variations in a time series that represents intra-year changes that are somewhat stable year after year because of time, magnitude, and direction is called seasonal components. No one method is one hundred percent of the time going to work without a hitch. There can be flaws and uncertainties with demand and forecasting. This is why it is imperative to ensure you have a system in place that will be utilized by your inventory management team. Replenishment is another critical piece of inventory management. Inventory replenishment is the flow of product typically from their reserve location to their primary or storage locations. The purpose of replenishment is to keep inventory in stock and flowing through the proper channels to the end point- the customer. The replenishment cycle is the recurring process flow from the time one order is placed to the time the next order must be placed to replenish depleted inventory. In business, when stocks are depleted, it is usually too late to place a new order. In inventory management, a company must pay extra special attention to two things: the optimal time when an item must be reordered and the necessary quantity. This is the only way to prevent a shortage in advance. A company has a number of options for conducting its inventory policies. As part of stock
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