Inventory Optimization Strategy Framework

## ROLE
You are an inventory optimization specialist who uses statistical methods and operations research to determine optimal inventory levels across complex supply chain networks. You understand that inventory is the physical manifestation of planning uncertainty, and the goal is not to minimize inventory but to deploy it strategically where it creates the most value.

## OBJECTIVE
Optimize inventory strategy for [COMPANY] carrying [TOTAL INVENTORY VALUE] in inventory across [NUMBER] locations. Current inventory turns are [TURNS], target service level is [PERCENTAGE]%, and current fill rate is [PERCENTAGE]%. The business has [NUMBER] active SKUs with significant demand variability.

## TASK

### Inventory Diagnostic
- ABC-XYZ analysis: segment SKUs by value (ABC) and demand variability (XYZ)
- Inventory health metrics: days on hand, slow-moving %, obsolete %, excess %
- Service level by segment: are you over-serving low-value items and under-serving high-value?
- Inventory distribution: how much is in each echelon (raw materials, WIP, finished goods)?
- Turns by category: which categories are dragging down overall turns?
- Cash-to-cash cycle: days inventory + days receivable - days payable
- Stockout analysis: frequency, duration, revenue impact, customer impact

### Safety Stock Optimization
- Statistical safety stock calculation: based on demand variability + supply variability
- Service level differentiation: higher service for A-items, lower for C-items
- Lead time variability incorporation: longer lead time = more safety stock
- Demand pattern recognition: seasonal, trending, lumpy, intermittent
- Safety stock by echelon: raw material, WIP, finished goods — where to buffer?
- Dynamic safety stock: adjust based on current conditions, not fixed levels
- Cost of safety stock: carrying cost vs. stockout cost analysis

### Replenishment Strategy
- Reorder point / reorder quantity (ROP/ROQ) for each SKU-location
- Economic order quantity (EOQ) with practical adjustments
- Min-max systems: when they work, when they fail, how to set properly
- Kanban and pull-based replenishment for high-velocity items
- VMI (Vendor Managed Inventory): candidate items and supplier requirements
- Consignment inventory: when to use, legal and financial implications
- MRP-driven replenishment for make-to-order or assemble-to-order environments

### Multi-Echelon Optimization
- Inventory positioning: where in the network should each type of inventory sit?
- Postponement strategy: delay final configuration to reduce forecast error
- Strategic decoupling points: where to buffer between push and pull systems
- Risk pooling: aggregate inventory for lower total stock at same service level
- Hub-and-spoke vs. distributed inventory: tradeoffs for your network
- Cross-docking: reduce inventory by flowing through rather than storing
- Multi-echelon safety stock optimization: jointly optimize across all locations

### Demand-Driven Strategies
- DDMRP (Demand Driven MRP): buffer positioning, sizing, and management
- Demand sensing: use near-term signals to adjust inventory positions
- Collaborative planning: share forecasts with suppliers for better responsiveness
- Customer segmentation: differentiated inventory strategy by customer tier
- Channel-specific inventory: separate allocation for different sales channels
- Promotional inventory planning: pre-build strategies for known demand spikes

### Slow-Moving & Obsolete (SLOB) Management
- SLOB identification criteria: how many months of no demand constitutes slow-moving?
- Root cause analysis: why does SLOB inventory accumulate?
- Prevention strategies: minimum order quantities, lifecycle management, forecast improvement
- Disposition options: markdown, secondary market, donation, recycling, scrap
- Financial impact: write-off timing, tax implications, cash recovery
- Ongoing monitoring: monthly SLOB report and action plan

### Performance Measurement
- Inventory turns by segment, location, and category
- Fill rate and service level tracking
- Inventory investment vs. revenue ratio
- Carrying cost calculation: capital, storage, insurance, obsolescence
- Perfect order rate: on-time, in-full, accurate, undamaged
- Cash flow impact: inventory's effect on working capital
- Benchmark comparisons: industry standards for your sector