Volume-Variance Analysis For Better Inventory Management

Sales & Marketing want inventory on hand and ready to sell, while Production is focused on low cost through long production runs and few changeovers. Typically, neither is held accountable for inventory performance resulting in negative impacts on inventory costs and/or customer service. In this article I provide practical methodologies to optimize inventory management using Coefficient of Variation for Volume Variance Analysis. This allows Demand Planners to identify the optimal inventory and manufacturing strategy for each product category, thereby keeping sufficient inventory to maximize sales while controlling production and carrying costs. Alan is an IBF Certified Professional Forecaster ...