Inventory Optimisation and EOQ-Safety Stock Modelling for FMCG Distributors in India

Objective: To design and implement an inventory optimisation model using EOQ and safety stock principles for a multi-SKU FMCG distributor to reduce stockouts and carrying costs.

Problem & Context: Indian FMCG distributors often manage hundreds of SKUs across multiple locations, facing challenges with unpredictable demand, frequent stockouts, and high carrying costs. Ineffective inventory policies lead to lost sales and reduced profitability, especially in tier-2 and tier-3 cities with variable demand patterns.

Approach & Methodology: The project will involve collecting historical sales and inventory data, mapping SKU-level demand variability, and applying EOQ (Economic Order Quantity) and safety stock models. The team will use statistical analysis and demand forecasting techniques to create robust inventory policies tailored for each SKU category.

Deliverables & Analysis: Key deliverables include a diagnostic report on current inventory performance, an Excel-based EOQ and safety stock calculator, scenario analysis for reorder points, dashboard visualisation in Power BI, and clear data-driven recommendations for inventory policy improvements.

Business Impact & Decision: The solution will support management decisions on purchase planning, warehousing, and distribution, driving lower inventory costs, improved service levels, and reduced stockouts, ultimately enhancing distributor profitability and customer satisfaction.