What is Capacity

Today's retail environment has become extremely competitive with retailers offering low prices almost on daily basis through various promotional techniques. Majority of their products placed on their shelves are promoted to boost sales, compete efficiently and gain market share. Retailers have a natural tendency to keep a very close watch on various costs in whichever way they can be curtailed or controlled. Costs like Labor, Transportation, Vendor Deals and Inventory reduction are some of the key areas that are tracked and renegotiated very frequently by retailers worldwide. Safety Stock holding is one critical area where a lot of work can be done “empirically” by retailers and distributors to create stock efficiencies across their established supply chain networks. Application of appropriate statistical techniques on the right set of products can help us getting a trimmed down safety stock numbers which are still capable in addressing the demand and supply variability while holding much lesser stock and still achieve greater customer service levels.