Inventory Optimization
Inventory optimization is a business and supply chain management concept focused on determining the optimal levels of inventory to hold across a network to meet customer demand while minimizing costs and maximizing efficiency. It involves using mathematical models, data analytics, and forecasting techniques to balance factors like stockouts, holding costs, ordering costs, and lead times. The goal is to ensure products are available when needed without overstocking, which ties up capital and increases storage expenses.
Developers should learn inventory optimization when building or maintaining systems for e-commerce, retail, manufacturing, or logistics, as it directly impacts profitability and customer satisfaction. It's crucial for implementing features like demand forecasting, reorder point calculations, safety stock management, and automated replenishment in inventory management software. Understanding this concept helps in designing algorithms that optimize supply chain operations, reduce waste, and improve decision-making in real-time applications.