Optimization of Inventory Allocation

The Big Ideas

  • In the complex omnichannel world of retail, efficiently allocating inventory to fulfillment centers is essential for creating a positive customer experience and for minimizing costs.

  • Allocating inventory to retail fulfillment centers requires forecasting total demand across the entire market and forecasting demand specific to sub-regions of the market (e.g. states, DMAs, or sales regions).

  • There is uncertainty associated with these forecasts stemming from two sources: uncertainty in consumer behavior as described by the forecasting model and uncertainty about the model itself. Current inventory

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