MEIO, or Multi-Echelon Inventory Optimization, refers to a strategic approach to inventory management which aims to optimize inventory levels across multiple levels of the supply chain. Unlike traditional inventory management, which often focuses on each stock level individually, MEIO takes into account the interrelationships between the different levels of the supply chain to optimize the whole system.
Some key points about MEIO :
1. Global optimization: Rather than optimizing inventories individually at each level of the supply chain, MEIO aims to maximize the overall efficiency of the system by taking into account the flow of products between the different levels.
2. Managing interdependencies: MEIO recognizes the interdependencies between stocks at different levels of the supply chain. For example, a variation in demand at retail level can have an impact on stock levels at wholesaler or manufacturer level.
3. Probabilistic modeling: MEIO often uses probabilistic models to forecast demand and other key variables. This enables more informed inventory management decisions.
4. Optimization of replenishment policies: Using advanced optimization techniques, MEIO helps determine the optimal replenishment policies for each level of the supply chain. Such as order quantities, replenishment points and security policies.
5. Reduced overall costs: By optimizing inventory levels across the supply chain, MEIO generally helps to reduce overall inventory costs, while maintaining adequate customer service levels.
