Demand Planners, Supply Planners, and Inventory Management

An important undertaking for any company to serve its customers is to determine how much inventory is necessary to satisfy customer demand. This article reviews some of the key supply and demand elements influencing this decision. It explores these in the context of their expected levels and the importance of considering variation around their expected levels. It further evaluates how well a widely used metric affecting the inventory decision actually affects the customer and the company—days of inventory on hand and or inventory turns.