Inventory control charts Flashcards
What are inventory control charts
A diagram used to represent an organisation’s stock levels over a period of time
What does the chart look like
https://docs.google.com/document/d/1h7s7IZFSAYaALCN6uQBF8b7WyaaYHe4Vrn4_Vha5HYM/edit
What does the spike represent
The spike represents that the supplier has delivered new stock
What is the re-order line
The re-order line is when a company predicts that they are going to run low on stock, so they order new stock so that they can continue to match supply to demand - The stock level that triggers the purchase of new inventory. The reorder level in this business of 60
What is the lead time
Lead Time = The amount of time between when the company orders stock, and when the stock arrives - In this case, the lead time = 5 weeks, as the reorder was ordered on week 3 and arrived on week 8 - The time taken for a supplier to deliver an order once it’s been placed.
What is buffer stock
Buffer stock is the safety stock that an organisation keeps in case of issues, problems, unexpected changes of demand - The target minimum level or inventory to be held by a business - This will vary business to business, it’s dependent on how reliable a business thinks it’s suppliers are
What is the reorder quantity
Reorder quantity = The difference between the lowest level of stock, and the highest level of stock - In this case it would be 70 (95 - 25). So the business is reordering 70 pieces with every order that they place with the supplier - The amount of stock a business orders
