For inventory intensive businesses, such as those that carry and on-sell products, one of the most important decisions is how much inventory to carry. Getting this right is often fundamental to the return on investment of that business.

These companies need to decide on two things – the quantity of each product to order (economic order quantity), and when to reorder more stock (re-order point).

Rather than rely on estimates, there are mathematical models for arriving at both the optimum re-order point and economic order quantity for each inventory item.

To do this, a business needs to evaluate:

1. The sales history for the previous 12 months
2. How much it costs to order a product
3. The lead time to re-supply the product, and
4. The cost of capital

Using this information, Transfirm works with businesses to determine their least cost inventory solution for optimum service levels to their customers.