Stock Control (Part 1)
Before we move to the types of Stock Control methodology, let’s look at some of the following terms used in Stock Control System.
|
Terms |
Meaning/Definition |
|
Lead or Procurement time |
|
|
Demand |
The amount required by the requestor whether from sales, production, etc |
|
Economic Ordering Quantity |
· Short term for EOQ · Also called Economic Batch Quantity (EBQ) · In short, it is a calculated ordering quantity which minimize the balance of cost between inventory holding costs and reorder costs. |
|
Physical Stock |
Actual number of items physically in stock at a given time. |
|
Free Stock |
Physical stock plus outstanding replenishment orders minus unfulfilled requirements |
|
Buffer/Minimum/Safety Stock |
A stock allowance to cover errors in forecasting the lead time or the demand during the lead time. |
|
Maximum Stock |
The maximum stock level indicator to show when stocks have risen too high. |
|
Reorder Level |
The stock level where further replenishment order needs to be placed. Depends on lead time and demand during the lead time |
Related Posts
- Stock Control System- Re-Order Level System (Part 3)
- Explain What Are Stock Reorder Level, Maximum, Minimum and Safety or Buffer Stock Level, Their Purpose And Formula.
- In Inventory control, what the assumptions underlying the Economic Order Quantity(EOQ)
- What are the advantages and disadvantages of using the Re-order Level Inventory control system
- Inventory Control by using the technique of ABC analysis.
Leave a comment