1. SCM (Supply Chain Management)
  2. Inventory Management
  3. Advanced Inventory Management
  4. Inventory Optimization

Inventory Optimization

Inventory Optimization is an Advanced Inventory Management feature that helps calculate planning values for eligible Reorder Point items.

Use Inventory Optimization to segment inventory, set service levels, and calculate Safety Stock Level, Reorder Point, and Preferred Stock Level values.

After you enable Advanced Inventory Management and Inventory Optimization, you can include eligible Reorder Point items.

You can then set segmentation preferences, review the default segments, and calculate inventory segmentation.

How Inventory Optimization Works

At a high level, Inventory Optimization includes segmentation and planning-value calculations:

  1. Segment eligible items by annual consumption value and demand variability.

  2. Calculate planning values for included Reorder Point items at the item-location level.

The result combines an ABC category and a 123 category, such as A1, A2, or C3.

Each segment has a default service level. You can use the default or override the service level on a segment, item, or item-location.

The planning calculation uses service level, demand history, lead-time history, and variability to calculate these values:

  • Safety Stock Level

  • Reorder Point

  • Preferred Stock Level

NetSuite calculates planning values at the item-location level for active, included Reorder Point items at locations where Make Inventory Available is checked.

ABC ranking applies to active Inventory and Assembly items that use any of these replenishment methods:

  • Reorder Point

  • Master Production Scheduling

  • Material Requirements Planning

  • Time Phased

Inventory Optimization assigns segments and 123 categories only to included Reorder Point items.

Related Topics

General Notices