6. Additional Inventory Management Processes and Concepts

Multi-Item Inventory Management

In Chapter 3, “Inventory Control,” we studied inventory models for a single item. It was important to start with a single item because it is difficult to understand multi-item inventory issues without understanding the single item issues. Let’s consider some of the reasons to understand multi-item inventory management decisions.

Consider a distribution center ordering 50 SKUs from a single supplier where each SKU is on a continuous review (Q,ROP) replenishment process. Hence, every time an SKU hits its ROP, an order is placed for that SKU and the SKU is delivered by a parcel carrier. Now, if that SKU is expensive and has a high inventory carrying cost ...

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