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Threshold Limit in inventory optimization is the pre-set level or boundary that triggers specific actions such as reorder alerts, inventory reviews, or emergency procurement. It acts as a control point to maintain inventory within desired limits. Setting appropriate threshold limits helps prevent stockouts and overstock situations by ensuring timely replenishment decisions. These limits are typically based on demand forecasts, lead times, and safety stock calculations and may be adjusted dynamically as conditions change. 

 

 

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Threshold Limit