Project Management

Evaluating Inventory Strategies

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Executive Summary

The retailer was growing rapidly through acquisitions and organic growth. The retailer was growing rapidly through acquisitions and organic growth. This produced a hybrid inventory strategy with some Stock-Keeping units (SKUs) stored at all the DCs and others at only a few centralized locations. The assignment of SKUs was largely based on the practices of the acquired companies. The retailer wanted to determine whether its inventory strategy was appropriate for its business. Using IBM ILOG Inventory Analyst, the inventory planning solution from LogicTools (now IBM ILOG), and scenarios was developed for each strategy. The retailer was able to reallocate nearly 25 percent of its SKUs between the two strategies, with a projected reduction in transportation and inventory holding costs of more than U.S. $1.5 million.

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