Inventory Management and Demand Forecasting

The purpose of this thesis is to evaluate Company F’s inventory management practices and make recommendations on how to improve ordering and reduce inventory carrying costs. With today’s software programs we are able to run analyses’ almost instantly that show us the relationship between demand and inventory. Ideally, every company wants to have enough inventory to meet customer demand, but not so much that carrying costs skyrocket. Not only does it cost more to store inventory, but it also ties up capital which is difficult to liquidate. Finding a happy medium between customer service level and carrying costs will keep company F’s franchisees satisfied and the company profitable. Using different forecast analyses’, I will be evaluating Company F’s fastest selling category of 5 products with the goal of finding the most accurate forecast model. I will also determine reorder points and reorder quantities for the rest of Company F’s SKU’s based on average usage, lead time, and safety stock. The result of my findings will provide cost savings for the company which affects the bottom line.

My recommendations to the company will be based on the findings of the analyses’ used. There may be multiple conclusions in the recommendations for demand forecasting based on each individual forecast used. However, I will give my insight on which forecast I think is more accurate and why this one would be the best to implement in terms of accuracy. Going forward, the company will be capable of implement these models and fine tune them as necessary to help streamline their inventory needs.