OOS check Inventory audit

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Inventory planning, clearly defined.

Clear definitions of the most important terms in demand forecasting, inventory management, purchasing, supply chain, and working capital.

33 expert terms · 5 topics

33 terms

A

InventoryABC analysisABC analysis prioritizes items by economic contribution and separates high-impact A items from B and C items.

B

OperationsBullwhip effectThe bullwhip effect describes how small demand changes become progressively larger order swings across the supply chain.

C

FinanceContribution marginContribution margin is revenue minus variable cost and shows how much a product contributes to fixed costs and profit.

D

ForecastingDemand forecastingDemand forecasting predicts future demand using historical data, seasonality, trends, and known business events.ForecastingDemand planningDemand planning combines a statistical forecast with marketing, sales, and operations knowledge to create an aligned demand plan.

E

PurchasingEconomic order quantityEconomic order quantity is the theoretical order size that minimizes combined ordering and inventory holding cost.

F

OperationsFill rateFill rate measures what share of demand can be fulfilled immediately from available inventory.ForecastingForecast accuracyForecast accuracy measures how close a forecast is to the demand that is later observed.

I

InventoryInventory coverageInventory coverage shows how long available stock will last at the expected demand rate.InventoryInventory managementInventory management covers the planning, monitoring, and control of stock across locations, channels, and time periods.InventoryInventory optimizationInventory optimization determines the economically best stock level per SKU to improve service level and cash flow at the same time.FinanceInventory turnoverInventory turnover shows how often average inventory is sold and replaced during a period.

L

PurchasingLead timeLead time is the time between placing an order and the inventory becoming available for sale.FinanceLost salesLost sales are purchases that do not happen because the required product is unavailable.

M

PurchasingMOQMOQ stands for minimum order quantity, the smallest quantity a supplier accepts per order or variant.

O

FinanceOpen-to-buyOpen-to-buy is the purchasing budget still available for a planning period after inventory and open orders are considered.InventoryOut of stockOut of stock describes a product that is unavailable at a relevant point of sale.InventoryOverstockOverstock is inventory that materially exceeds the economically expected demand.

P

PurchasingProcurement planningProcurement planning determines which products must be ordered, in what quantity, and at what time.PurchasingPurchase orderA purchase order is the formal order sent to a supplier with items, quantities, prices, and delivery dates.

R

PurchasingReorder pointThe reorder point is the inventory level at which a replenishment order should be triggered.PurchasingReplenishmentReplenishment is the demand-driven restocking of inventory through new orders or transfers.OperationsReturn rateReturn rate shows what share of sold or shipped items is returned.

S

OperationsS&OPS&OP is a recurring alignment process that brings demand, supply, inventory, and financial targets into one plan.InventorySafety stockSafety stock is additional inventory held to absorb uncertainty in demand and lead time.ForecastingSales forecastA sales forecast estimates how many units of a product will sell during a future period.ForecastingSeasonal demandSeasonal demand consists of recurring sales patterns linked to the calendar, weather, holidays, or consumption cycles.OperationsService levelService level describes the target probability of meeting demand without a stockout.OperationsSKUA SKU is the smallest uniquely managed inventory unit, usually a specific product, size, color, or pack configuration.InventoryStockoutA stockout occurs when available inventory for a SKU reaches zero while demand still exists.OperationsSupply chainThe supply chain covers all processes and partners from raw material or supplier through delivery to the customer.

W

FinanceWorking capitalWorking capital is the net short-term capital tied up in operations; inventory is often the largest controllable component for e-commerce brands.

X

ForecastingXYZ analysisXYZ analysis classifies items by how regular and therefore predictable their demand is.