No Sales, No Business and No company!! Hence, regardless of an Industry, Inventory Management is important Supply Chain Management. It may be Hospital, Retail Store or what not, all need to sell on pull basis - not push.

1. Inventory Management – Allocation Analytics:
Proof of Concept
Leading National
Retailer

2. Background and Context
• Problem Statement and Scope
• Proof of Concept Activities

3. Scope of POC
Like
Product
Demand
Model
Buy & Assortment
Buy
Plannin
g
SellAllocate. Replenish
Lost
Sales
Analysi
s
Store
groupin
g
Allocate
based
on
Actual
sales
Allocate
based on
event
Initial
Set &
Fixture
Analysis
Monte
Carlo
Simulati
on
The Scope of Proof Of Concept restricted to the allocation, replenishment process and sell only.
IN SCOPE

4. Impact of Event Sales on In-Season Sales
0
20
40
60
80
100
120
7/2/2005
7/9/2005
7/16/2005
7/23/2005
7/30/2005
8/6/2005
8/13/2005
8/20/2005
8/27/2005
9/3/2005
9/10/2005
9/17/2005
9/24/2005
10/1/2005
10/8/2005
10/15/2005
10/22/2005
0
1000
2000
3000
4000
5000
6000
EVT_SELL_PCT TOT_WK_REG_EVT_SELL
0
20
40
60
80
100
120
7/2/2005
7/9/2005
7/16/2005
7/23/2005
7/30/2005
8/6/2005
8/13/2005
8/20/2005
8/27/2005
9/3/2005
9/10/2005
9/17/2005
9/24/2005
10/1/2005
10/8/2005
10/15/2005
10/22/2005
10/29/2005
11/5/2005
11/12/2005
11/19/2005
11/26/2005
12/3/2005
12/10/2005
12/17/2005
12/24/2005
12/31/2005
1/7/2006
1/14/2006
1/21/2006
1/28/2006
0
5000
10000
15000
20000
25000
30000
35000
EVT_SELL_PCT TOT_WK_REG_EVT_SELL
FallWinter
Pants

5. Current Approach Forecast Sales Patterns – Data Analysis
Price has a significant relationship to,
and inverse effect on sales patterns.
Event and Price Relationship
Because event calendar was not available , event sales
were analyzed based on the price data
Week into the season is a direct variable in the sale pattern.

6. Impact of Price on In-Season Sales
FallWinter
Pants
Price has a significant relationship to, and inverse effect on sales patterns.

7. Forecast Results (Forecast Vs Actual)FallWinter
Pants Knit Top

8. Recommended Allocation Process and Solution Components
Initial Allocation
based on Volume
and Trend
- Allocate sufficient qty for the first
four weeks
-Allocate sufficiently for high
velocity low volume stores as well
as high velocity high volume stores
Buy Plan,
Event
Marketing
Calendar
Re-forecast
based on actual
data and
historical trends.
- Identify a blend of actual
data from the current season
and historic data to arrive at a
refined volume forecast at
store
Optimized Initial Allocation
- Allocate stock to cover the
initial sales curves
Inventory
Positions
Ongoing
Allocation
Fixture
Constraints
Fixture
Constrain
ts
Optima
l
Invento
ry
cover
Solution Component 1 Solution Component 2
Solution Component 3
Allocation Simulation Model
Multinomial Logistic
Regression
Exponential smoothing
technique

9. Store Level ForecastsFallWinter
Pants
0
20
40
60
80
100
120
7/1/2006
7/8/2006
7/15/2006
7/22/2006
7/29/2006
8/5/2006
8/12/2006
8/19/2006
8/26/2006
9/2/2006
9/9/2006
9/16/2006
9/23/2006
9/30/2006
10/7/2006
10/14/2006
10/21/2006
cumul_share cumul_pred_share

10. Executive Summary
Business Objective Improve sales and profit through
application of data analysis driven
allocation process
Top Findings in
Current State
- Lost Sales opportunities
- High Initial Allocation
- Imbalance in inventory cover across stores
- Sub-optimal Response of Allocation systems to
in-season sales
- Data unavailability and Data Quality for
extensive granular analysis
Recommendation Short Term: Sales Pattern based allocation
Medium Term: Store Clustering & Alternate Size
Ratios
Long Term: End-to-End Allocation Solution