Defining Inventory Policies for your ABC Product Groups-A Cheat Sheet

A crucial first step before you embark on your inventory optimization journey is to define your inventory policy. Typically, an organization will have a gamut of product lines and already defined product groups, based on certain characteristics of these product lines (most common is the ABC classification for Inventory Management purposes). Since the purpose of creating those product groups is to manage your Inventory for each group differently, it is important to analyze which Inventory Policy is appropriate for which product group.

The Overview below assumes that you are familiar with different Policies like (s,Q), (s,S), (R,S) and (R,s,S). If you want to refresh your memory on these policies, please refer to my post on “A Summary of commonly used Inventory Policies” for brief explanations on what these policies are. The overview below also provides a high level overview of the characteristics of items in each of the product groups but if you are looking for some more details, please refer to my post on ABC Classification (Overview of ABC Classification for Inventory Management).






Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s