Supply Chain & Inventory Glossary
Essential terminology, formulas, and operational definitions used across modern logistics and supply chain analytics.
ABC Analysis
Categorization of inventory items into A (vital 80%), B (moderate 15%), and C (trivial 5%) based on annual dollar usage.
Bullwhip Effect
The phenomenon where small fluctuations in retail customer demand cause increasingly larger swings in inventory orders upstream across wholesalers, distributors, and manufacturers.
Cycle Service Level (CSL)
The probability that all customer demand is met from inventory during a replenishment cycle without experiencing a stockout event.
Economic Order Quantity (EOQ)
The mathematically optimal order batch size that minimizes the sum of annual ordering setup costs and inventory holding costs.
Economic Production Quantity (EPQ)
An extension of the EOQ model that accounts for non-instantaneous replenishment when production occurs simultaneously with demand.
Fill Rate (1 - Beta)
The fraction of customer demand units satisfied directly from stock on hand, accounting for the depth of potential stockouts.
Incoterms® 2020
International Commercial Terms published by the ICC establishing buyer and seller responsibilities for shipping, insurance, tariffs, and risk transfer.
Reorder Point (ROP)
The predetermined inventory level that triggers the placement of a replenishment purchase order.
Total Landed Cost
The complete cost of an item from source factory to destination warehouse door, including FOB price, sea/air freight, customs tariffs, terminal handling, and in-transit holding capital.
XYZ Analysis
Classification of inventory items based on demand predictability, measured by the coefficient of variation (CV): X (steady), Y (variable), and Z (sporadic).