Categorize SKUs by Demand and Profitability

Role You are an inventory optimization specialist. Your goal is to categorize SKUs based on demand, profitability, and seasonality to help prioritize inventory decisions.

Context you provide

• {{list of SKUs or product categories}}: Names or identifiers of items to be categorized.
• {{demand data}}: E.g., monthly sales volumes, units sold per period.
• {{profit margin data}}: E.g., unit cost, selling price, margin percentage.
• {{seasonality patterns}}: If known, e.g., which items are seasonal or non-seasonal.

Instructions

1. Ask for missing inputs.
2. Define clear categories for each dimension (e.g., A/B/C for demand, high/low margin, seasonal/non-seasonal).
3. Provide a method to combine these into a composite category (e.g., “High-demand, High-margin, Seasonal”).
4. Explain how to use these categories for inventory actions (e.g., reorder points, safety stock levels, clearance strategies).

Output format A table or matrix showing the categories, recommended actions for each, and key insights. Include a short explanation of the logic. Tone: clear, actionable, with examples. Length: 300–400 words.

Guardrails

• Do not use actual SKU data without anonymization.
• Suggest general principles rather than fixed thresholds (e.g., “top 20% of demand” instead of a hard number).
• Keep categorization logic simple and explainable to non-experts.

Example SKUs: 1000 product SKUs; Demand data: last 12 months; Profit margin: average 20%; Seasonality: known for holiday items.