Stock Level

Lead Time: This is the time between an order being placed, and the goods being received. Stock Levels. Time. Minimum Stock Level (eg 100 units) Maximum Stock Level (eg 300 units) Re-Order Level (eg 200 units) Jan. Feb. Mar. Apr Lead Time. Lead Time.

STOCK LEVEL

The level at which any item of stock to hold is difficult to determine with the two dangers always present in either running out of stock of an item with all the problems that would follow, or of overstocking of an item, and thereby trying up necessary capital- the main determinants of stock level are-

  1. The max and min forecast usage figures for the trading period, based on the volume forecast of sales and past history.
  2. The reordering time for the items
  3. The economic ordering quantity
  4. Market trends-change in price and scarcity
  5. The storage space available, the shelf life of the item and budget available for the purchasing.

These determinants are beyond the control of the purchasing manager however his contribution must be to work towards the investments stock and rate of turnover. It is convenient to examine the stock of an item in three parts.

  1. The buffer stock – The minimum stock that will always exist. If the purchasing goes according to plan and if the purchasing does not go according to the plan the buffer stock would be used until further supplies were obtained.
  2. The working stock being the stock in use, which would rise and fall as each batch is received and issued.
  3. The recorded level is the level, which the stock in hand has reached. When it is necessary to make further order. So as to prevent running out of stock. This level would be set in advance for each item and has to be at least enough cover any normal future demand and also the reordering time may be greater than previously. It is usual when attempting to secure an acceptably low risk of stock out to include in the reorder a buffer stock is a protection against the problem occurring.

MAXIMUM STOCK LEVEL– This is level beyond which should not be maintained. The main objective is to avoid overstocking and thereby using working capital in a proper way.

SAFETY STOCK OR BUFFER STOCK:– It is very difficult to predict usage and the lead time. The demand for the material may fluctuate from the normal lead-time. If the actual usage increases or the delivery of the inventory is delayed the firm can face the problem of stock out. The stockout can prove to be costly for the firm therefore in order to guard against the stock out the firm may maintain a safety stock or buffer inventories caution against expected increase usage or delay in delivery time.

REORDER POINT:- The problem of how much to order, is solved by determining the economic order quantity, yet the answer should be solved to the second problem when to order. This is the problem of determining the order or reorder point. The reorder point is an inventory level at which an order should be placed to replenish the inventory. To determine the reorder point under certainty we should know

  • The lead – time
  • The average usage,
  • EOQ.

The LEAD – TIME is the time taken in receiving the delivery of inventory after the order has been placed.

REORDER POINT = LEAD TIME / AVERAGE USAGE

E.g – The reasonably expected stock out is 25 units per week. The firm should maintain a safety stock of 75 units. (25 units x 3 weeks). Thus the reorder will be 150 units + 75 units = 225 units

MINIMUM LEVEL OF STOCK – This is the level of stock under no circumstance fall below this level. If the stock level falls below this limit than the operations will jeopardize.

106 COMMENTS

  3. canadian pharmacy world [url=http://canadaph24.pro/#]Certified Canadian Pharmacies[/url] best canadian pharmacy online

  5. top 10 pharmacies in india [url=http://indiaph24.store/#]reputable indian online pharmacy[/url] buy medicines online in india

  10. cytotec pills buy online [url=http://cytotec.club/#]buy cytotec online[/url] Cytotec 200mcg price

  12. ciprofloxacin 500mg buy online [url=http://ciprofloxacin.tech/#]cipro 500mg best prices[/url] cipro ciprofloxacin

  28. lisinopril brand name uk [url=http://lisinopril.network/#]lisinopril 10 mg on line prescription[/url] lisinopril 25 mg

  41. Cialis over the counter [url=http://cialist.pro/#]Generic Tadalafil 20mg price[/url] Buy Cialis online

  44. Generic Cialis price [url=https://cialist.pro/#]Cialis over the counter[/url] Cheap Cialis

  48. cheapest cialis [url=https://cialist.pro/#]Generic Cialis without a doctor prescription[/url] Cheap Cialis

  50. Cialis without a doctor prescription [url=http://cialist.pro/#]Tadalafil price[/url] Cialis 20mg price

  52. buy Kamagra [url=http://kamagra.win/#]kamagra oral jelly[/url] sildenafil oral jelly 100mg kamagra

  54. buy meds online without prescription [url=http://pharmnoprescription.icu/#]order medication without prescription[/url] online prescription canada

  64. online pharmacy not requiring prescription [url=http://pharmnoprescription.icu/#]buy prescription drugs on line[/url] how to order prescription drugs from canada

  68. ordering drugs from canada [url=http://pharmcanada.shop/#]cross border pharmacy canada[/url] canadian pharmacy 24h com safe

  80. where can i get prednisone [url=https://prednisoned.online/#]prednisone 20 tablet[/url] where to buy prednisone uk

  86. buy doxycycline cheap [url=http://doxycyclinea.online/#]buy cheap doxycycline[/url] doxycycline 100mg tablets

  89. amoxicillin 500mg without prescription [url=http://amoxila.pro/#]amoxicillin generic brand[/url] azithromycin amoxicillin

  94. doxycycline 50mg [url=https://doxycyclinea.online/#]generic for doxycycline[/url] doxycycline medication

  98. amoxicillin 500 mg for sale [url=https://amoxila.pro/#]medicine amoxicillin 500mg[/url] medicine amoxicillin 500mg

LEAVE A REPLY

Please enter your comment!
Please enter your name here