Inventory Management KPIs
The below workflow can be used for Inventory management. It categorizes the inventory based on the ABC model on the basis of values and calculates the Safety stock, Reorder point and Economic Order Quantity[EOQ] for the provided dataset. It can be used to calculate safety stock on the basis of a service level specified by the user.
The input dataset for this workflow is the demand data which consists of the following variables:
*Order date *Name of SKU *Consumption[refers to Quantity ordered] *Unit cost *Order fulfillment data
The workflow first calculates Lead time from the date difference between order date and order fulfillment date and the total value of each order is also calculated by multiplying the unit cost against the consumption quantity.
Categorization based on ABC model- Pivoted the dataset based on SKU’s, arranged them in terms of their aggregate order value and categorized inventory using the following rule
Category A- Items contributing to 80% of the total value
Category B- Items contributing to the next 15% of total value
Category C- Items contributing to the last 5% of total value
Safety Stock, Reorder point and EOQ- Calculated safety stock giving the user an option to choose the service level by changing the probability value in the “Probability Point Function” node as per their requirement. The default value in the workflow is 0.9 or 90%. These safety stock values are then used to calculate the Reorder Point and then the Economic Order Quantity is calculated.