With its limited shelf life, Tart cherry juice embodies the delicate balance between waste and availability, presenting retailers with a challenge: order more and risk expiration, or order less and risk stockouts. The trade-off between waste and lost sales is a critical consideration in inventory management and replenishment for perishable products. Companies must carefully consider expiration dates when replenishing inventory, aiming for precision in the quantity and timing of their orders.
Waste management includes storage costs, depreciation of perishable goods, and disposal expenses. Meanwhile, lost sales mean immediate revenue loss and potential damage to customer relationships and brand reputation due to product unavailability. Retailers must find the right balance to optimize inventory levels while minimizing waste and lost sales.
If planners aim to achieve a 100% availability target service level for tart cherry juice, they can increase safety stock levels to ensure the product is always available to customers. However, this approach is likely to result in excess inventory and waste. To strike a balance, AI can assist companies in conducting a cost simulation, comparing the expense of holding excess inventory (resulting in waste) with the cost of failing to meet customer demand (leading to lost sales). This analysis identifies the inventory level where profitability is maximized by keeping customers happy while minimizing excess stock. The simulation can provide various replenishment values to offer an optimized quantity for each product at each location.
Based on the company’s strategy, they can prioritize factors such as availability for customers, minimizing waste, or following system-generated recommendations for the lowest total cost to serve. Using AI/ML Inventory solutions, retailers and distributors can automatically prioritize trending fresh products such as tart cherry juice.
The tart cherry juice sleep trend is a testament to AI’s transformative potential in inventory planning. As demand for niche and trending products rises, retailers must embrace innovative solutions to stay ahead of the curve.
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