Optimal Inventory Level is the precise amount of stock needed to meet customer demand without overstocking or understocking. It balances service level goals with cost efficiency. Calculating optimal inventory requires insights into lead times, forecast accuracy, service levels, and order costs. Over time, this level may change due to demand patterns, supplier reliability, or changes in business strategy. Inventory optimization platforms constantly monitor and recalibrate optimal levels using machine learning and predictive analytics. This ensures companies maintain lean inventories while safeguarding fulfillment capabilities.
