Track: Inventory Management

Abstract

Retailers are often dealing with an inventory replenishment environment in which deliveries to each store are based on a periodic delivery schedule, replenishment lot sizes are influenced by  an integer multiple of a fixed case pack size, sales follow a seasonal weekly pattern and shelf space per SKU is limited. This is the case of the leading Mexican convenience store supply chain. Inventories levels are impacted by decisions made by several organizational units without coordination. Marketing personnel are interested on setting display and promotional inventories to accomplish high customer service levels and sales growth; logistics personnel are preoccupied for replenish inventory to cover normal demand patterns; suppliers determine product pack sizes that satisfy their criteria. The impact of all these decisions has led the company to hold inventory levels of about 30 days on average with replenishment cycles of seven days. This work describes the efforts of the company to look for opportunities to decrease inventory levels through the application of a scheme that intends to integrate and coordinate the previous concepts. Results of the pilot studies of implementing the suggested initiatives are provided.