Anticipation Inventory

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CIOP is an end-to-end supply chain training and certification program designed and developed by supply chain practitioners and consultants. The syllabus was developed in consultation with the industry, which led to Inventory Management Body of Knowledge (IMBoK v3.0). Most of the class discussions you will hear cannot be found in any textbook rather these are all the original contribution from the developers of CIOP. For example, think about the types of inventories such as raw material, work-in-process and finished goods. Out of these three, WIP is the most difficult to sell in the market and that is one of the reasons, WIP should be controlled well. The company has a built-in capability and capacity to sell finished goods, which is their business. The second easy to sell are the raw materials as you know the suppliers, who may either buy-back or at least guide you. But in case of WIP, this is custom manufactured to suit your manufacturing processes and may not well fit any other organisation, hence you may have to sell it as a scrap.



Anticipation inventory is the intentional built up or accumulation of inventory by an organisation to meet the spike in demand for a duration or due to an event. Anticipation inventory is one of functions of the inventory.

Anticipation inventory may exist in raw materials or work-in-process or finished goods or a combination of thereof. But most of the companies keep anticipation inventory in finished goods as it is to meet the customer demand.

A spinning mill buys large quantity of cotton to meet the demand from clients who are dealing with school uniforms. An example of anticipation inventory in raw materials.  

A shoe manufacturing company unit buys raw hides and processes them into leather. As leather is a stable one than hide, they do this transformation and keep it as work-in-process. So the company is prepared for the peak season.

A fireworks company in India manufactures various types of crackers and stores them for the huge sale that happens around Diwali, Christmas, and New Year Eve. This is an example of anticipation inventory in finished goods.


The sources of demand for the anticipation inventory are the following:

1. High seasonality of a product
2. Global, National and Regional festivals such as Ramadan, Diwali, Halloween, Christmas etc.
3. Events like school reopening, election, movies etc.
4. Launch of innovative products!
5. A new trend like usage of masks after COVID 19. 

Anticipation inventory is very much suitable for products with high contribution margin. The limit of building the anticipation inventory both in terms of quantity and duration is a function of carrying cost and contribution margin. No company would build anticipation inventory where the carrying cost is exceeding the contribution margin per unit.


1. Anticipation inventory helps a company to plan and build the inventory well in advance, so that it does not disappoint its loyal customers.
2. Helps to capitalize the seasonal sales and boost revenue.
3. Holds the loyal customers and prevents them to migrate to competitor products.


1. A poorly planned anticipation inventory quantity may force a company into rough terrains to the extent of bankruptcy.
2. Cost of warehousing, additional labour, insurance etc. add to the cost.

Anticipation inventory is the store of materials, parts, or products kept on hand by an organization or firm to fulfill demand during a period of time before demand arises or to fill the gap caused by sporadic production. It is also known as build up stock, seasonal stock, or simply inventory. In industrial situations where the supply chain is long and the stocks are regularly replenished, the inventories generally have longer life than those used in supply chain scenarios with shorter supply lines. If you are a manufacturer who must regularly evaluate your inventory, an anticipation inventory system can help you greatly.

In anticipation inventory systems keep a large reserve of your products so that when your supply line is closed for the day due to a weather event, the inventory is there to fulfill demand. When stockouts occur because of unanticipated bad weather or supply shortfalls, it is possible that you will experience lost sales, which will directly affect the profit and losses. The lost sales can seriously impact your bottom line and cause you to lose money.

A well-planned inventory cycle provides excellent management of your inventory, including its cycle stock requirements and lagging sales. If you have warehouses that are routinely stocked, you don't have to wait for days, weeks or even months to let customers know you have something in stock. Instead, you can contact them immediately with an updated inventory status, letting them know right away that your inventory is running low. Because you are using anticipation stock as an additional source of demand to boost sales, you will avoid the stockouts, which in turn, will save you money in storage costs, labor and materials costs, and profit.

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Certified Inventory Optimization Professional 

CIOP is an end-to-end supply chain certification that contains 30 modules such as Introduction to Supply Chain Management, All About Inventory, Production Planning System, Strategic Business Planning, Sales & Operations Planning, Master Scheduling, Material Requirements Planning, Demand Management, Capacity Management, Forecasting, Production Activity Control, Procurement, Order Quantities, Independent Demand Ordering Systems, Warehouse Management, Transportation Management, Supplier Relationship Management (SRM), Customer Relationship Management (CRM), Introduction to Quality, Introduction to Packaging, Introduction to Process, Lean, Six Sigma, Total Quality Management, Theory of Constraints, Supply Chain Technologies, Supply Chain Techniques, Industry 4.0, International Standards and Supply Chain Risk, Safety and Security. 

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