What are the advantages and disadvantages of using the Re-order Level Inventory control system

January 14th, 2012 Comments off
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1 Lower stocks on average 1 Many items may reached re-order level at the same time, thus overloading the re-ordering systems
2 Items ordered in Economic quantities via the EOQ calculation 2 Items come up for re-ordering in a random fashion so that there is no set sequence
3 Somewhat more responsive to fluctuations in demand 3 In certain circumstances ( eg variable demand, ordering costs etc), the EOQ calculation may not be accurate.
4 Automatic generation of a replenishment order at the appropriate time by comparison of stock level against re-order level
5 Appropriate for widely differing types of inventory within the same firm

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Financial Accounting


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