Demand Forecasting and Inventory Optimization in a Building Materials Distribution Company in Abuja

Building materials distribution companies in Nigeria's Federal Capital Territory face acute inventory management challenges driven by volatile construction sector demand, long supplier lead times, and limited warehousing capacity. This study applies demand forecasting and inventory optimization methods to improve stock management at a building materials distribution company operating three depots in Abuja. Historical monthly sales data for 18 product categories covering a five-year period are used to develop and compare forecasting models including moving averages, exponential smoothing, and ARIMA. Forecast accuracy is evaluated using MAPE, and the best-performing model for each product category is selected. The forecasting output is integrated into a continuous review inventory model that determines optimal reorder points and order quantities for each category, accounting for supplier lead time variability and target service levels. Results indicate that implementing the optimal inventory system reduces average stockholding by 22 percent while improving product availability from 83 percent to 96 percent of demand occasions. Total annual inventory cost is projected to fall by N18.4 million across the three depots. An ABC-XYZ analysis classifies products by value and demand variability, enabling differentiated inventory management policies tailored to each product segment's characteristics. Recommendations include investing in inventory management software and establishing monthly forecast review meetings. This research provides a practical inventory optimization guide for building materials distributors in Nigeria's growing construction sector hub. Keywords: demand forecasting, inventory optimization, building materials, Abuja, ABC-XYZ analysis