What this book is About

Anyone can buy a truck or warehouse. The successful organization is the one that uses these resources most efficiently.

Before computers, inventory was managed by classes, such as “A-B-C”. This made it possible to achieve big, obvious efficiencies. But with computers, we can now manage inventory at the level of the individual stock-keeping unit (SKU), even for hundreds of thousands of SKUs.

Imagine each SKU as a commuter traveling to a destination. Each commuter makes choices of timing and travel — car, taxi, bus, bicycle, foot — based on budget and urgency. In a similar way, we can help each SKU plan its travel to the consumer. Along the way it will make a series of decisions based on economic models.

We call this “nanoeconomics”.

By optimizing decisions at the level of individual SKUs, it is possible to save a few seconds here and a few centimeters there, which, when accumulated over hundreds of thousands or more transactions, can amount to significant savings.


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