Glossary
What is Inventory Optimization?
Last updated July 2026
Definition
Inventory optimization sets the right stock level for every item across every location — balancing service against carrying cost — rather than applying blanket rules.
It replaces static, one-size-fits-all reorder points with policies tuned to each item's demand, criticality, and lead time.
AI-driven optimization can cut inventory 20–30% while holding service levels, because it targets the specific SKUs holding cash without serving demand.
Sources: Epicor / MDM
Part of Excess & obsolete inventory.
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