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Definitive Guides for Supply Chain Management Professionals (Collection) by Nada Sanders, Tate Wendy, Haozhe Chen, C. Clifford Defee, Joe B. Hanna, Gibson Brian J., Brian C. Keller, Scott B. Keller, Robert Frankel

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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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