Inventory Health Analysis

Overview

Inventory health balances two risks: stockouts (lost sales, unhappy customers) and overstock (carrying costs, obsolescence). This skill provides tools to measure, classify, and optimize inventory levels.

Framework

IRON LAW: Not All SKUs Deserve Equal Attention

ABC classification shows that ~20% of SKUs drive ~80% of revenue.
Treat A-items (top 20% revenue) with tight control and frequent review.
C-items (bottom 50% revenue) get simple rules and less attention.
Equal treatment of all SKUs wastes resources on low-impact items.

Key Metrics