Inventory Targets Model (Excel XLS)

This tool is designed to compute optimum inventory level in a manufacturing environment based on customer service level, sales forecast, capacity utilization, and distribution channel. It can be used to estimate optimum level of pre-build stock, safety stock, in-transit stock and cycle stock by SKU class.

While an EOQ inventory model is theoretical in nature, this model is more practical and has been applied to effectively reduce inventory levels at a pharma company in North America.

This template provides a comprehensive approach to determining inventory targets by SKU class. It factors in various scenarios and weighted averages to ensure your inventory levels are optimized for different service levels and shipment frequencies. The model's flexibility allows you to adjust parameters like days between shipments and customer service levels to see how they impact your inventory requirements.

You can also compute pre-build inventory needs based on both unit and dollar values, offering a dual perspective on your inventory strategy. This is particularly useful for aligning your financial planning with your inventory management. The visual representation of inventory targets for each SKU class makes it easy to communicate strategies and decisions to stakeholders.

The tool's practical application is demonstrated through detailed computations and visual aids, ensuring you can quickly grasp the impact of different variables on your inventory levels. This makes it an invaluable resource for decision-makers looking to balance service levels with inventory costs.

Incorporating this model into your operations can lead to significant improvements in inventory efficiency and cost savings. It's designed to be user-friendly yet robust enough to handle complex inventory scenarios, making it suitable for a wide range of industries and business sizes.