Why Is Inventory Important?
Distribution and inventory (logistics) costs are quite
Total U.S. Manufacturing Inventories ($m):
1996-08-31: $m 1,000,774
2006-05-31: $m 1,324,108
Why Is Inventory Im
Demand variability is reduced if one aggregates
demand across locations.
More likely that high demand from one customer will be
offset by low demand from another.
Reduction in variability allows a decrease in safety
For most companies demand is uncertain and
Forecasting demand levels is vital for the firm
It provides inputs for the planning and control of all