Maintaining a high inventory may seem like a safety net, but in reality, it carries a number of significant costs and risks that can erode your company's bottom line. 1. Financial and opportunity costs: Inventory is tied-up capital. Financing excess stock means paying interest on loans or losing the opportunity to invest that money in something more profitable. 2. Storage and handling costs: An abundant stock requires more space and movement, generating expenses for warehouse rental, labor and associated resources. The longer an item remains in the warehouse, the greater the expense. 3. Taxes, insurance and shrinkage: Higher inventories translate into higher taxes and insurance. In addition, the risk of shrinkage, obsolescence and physical deterioration or expiration increases. To achieve this balance between availability and profitability, it is essential to have an accurate safety stock calculation. ABCstock calculates expected demand based on order history, using a combination of up to 10 statistical methods with more than 1000 parameter variations. This includes special models for trending, seasonal, new or irregular demand items, and even for product and family substitution. The software automatically selects the best forecasting method per item/warehouse, based on last year's performance. This predictive capability is crucial to avoid stock-outs and customer dissatisfaction, which can lead to lost sales.