How Nova Works
Nova uses Orion's demand forecasts combined with supplier data to calculate optimal inventory parameters for each SKU.
Safety Stock Optimization
Safety stock is calculated dynamically based on:
- Demand Variability: Standard deviation of demand
- Lead Time Variability: Uncertainty in supplier delivery
- Service Level Target: Your desired in-stock rate
- ABC Classification: Higher service for A items
Reorder Point Calculation
The reorder point (ROP) tells you when to place an order:
ROP = (Avg Daily Demand × Lead Time) + Safety Stock
Nova calculates this dynamically as demand and lead times change.
Economic Order Quantity
Nova optimizes order sizes to balance ordering costs vs holding costs:
- Considers supplier minimum order quantities
- Accounts for quantity discounts
- Factors in storage constraints
- Optimizes for cash flow
Decision Types
Reorder Alert
Stock has reached reorder point, order recommended
Safety Stock Adjustment
Safety stock levels need updating based on new patterns
Overstock Warning
Excess inventory detected, consider markdown or transfer
Stockout Risk
Stock projected to run out before next delivery
Inputs Required
| Data Type | Required | Description |
|---|---|---|
| Inventory Levels | Yes | Current stock by SKU and location |
| Products | Yes | SKU master with cost data |
| Suppliers | Recommended | Lead times, MOQs, reliability |
| Demand Forecasts | Auto (Orion) | Generated by Orion agent |
ABC Classification
Nova automatically classifies inventory using ABC analysis:
- A Items (Top 20%): 80% of value, highest service level (98%+)
- B Items (Next 30%): 15% of value, standard service (95%)
- C Items (Bottom 50%): 5% of value, lower service (90%)
You can override classifications for strategic items.
Multi-Location Optimization
For businesses with multiple warehouses, Nova optimizes across locations:
- Demand by Location: Forecast at location level
- Inter-warehouse Transfers: Balance stock between locations
- Hub & Spoke: Centralized safety stock strategies
- Location-specific Lead Times: Different suppliers per region
Example Decision
Reorder Recommendation
- Current stock below reorder point (28 < 35)
- Supplier lead time: 7 days
- Forecasted demand (next 7 days): 45 units
- Stockout risk without order: 95%
Best Practices
- Keep supplier lead times updated for accurate ROP
- Review ABC classifications quarterly
- Set realistic service level targets by category
- Monitor stockout alerts and act within lead time