Introduction to Inventory Planning and Optimization

In this unit we address Inventory Planning and Optimization as vital components of SAP IBP.

Inventory Planning and Optimization are a critical parts of any supply chain. It will help put inventory where it is needed, optimize service level, reduce inventory holding costs, avoid stock out situations, and provide valuable input to a supply plan as a whole.

Note

Some functions explained on this chapter might require additional licenses. The following link provides an overview of the available licenses for SAP IBP: SAP Help → SAP Integrated Business Planning for Supply Chain → Applications and Features of SAP Integrated Business Planning for Supply Chain. → SAP IBP for Inventory

SAP Integrated Business Planning for inventory considers the following parameters to generate an optimal safety stock recommendation:

• Demand variability, forecast error, and supply uncertainties

• Relative costs, timing, and inter-relationships across the supply chain

• Interdependency of inventory across warehouses and other important critical factors in inventory target setting