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.

We are pleased that this web site has been awarded the designation “MERLOT Classic”.