Mentzer Model

The Mentzer Model is a way to understand how businesses manage inventory and meet customer demand. It emphasizes that the amount of stock a company keeps depends on factors like current demand, lead times for ordering, and safety stock to cover uncertainties. By calculating these elements accurately, companies can optimize their inventory — avoiding excess stock or shortages — and improve efficiency. The model highlights the importance of aligning inventory levels with actual sales patterns and supply chain efficiency, promoting a balanced approach to keeping enough stock to satisfy customers without tying up unnecessary capital.