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  Best Practices: Planning: Optimize Inventory
Case Study


Item: Cable 

Average demand: 2500/mo. 

Standard Deviation of demand: 150/mo. 

Average lead-time: 45 days 

Standard deviation of lead-time: 35 days

Purchasing was charged with reducing inventory investment. They battled for years with Operations to get more accurate forecasts to reduce demand based safety stock. Ironically, there was more savings from managing the vendor lead times. Also, Purchasing had a lot more leverage over the supplier.


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April 5, 2000
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