Inventory Management Techniques and Time-Keeping Methods
Classified in Economy
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Minimum Level or Safety Stock
The minimum level is the minimum quantity of the material which must be maintained in hand at all times. The quantity is fixed so that the production is not held up due to shortage of the materials. In fixing this level, the following factors should be considered:
- Lead time i.e. time lag between indenting and receiving of the material. It is the time required to replenish the supply.
- Rate of consumption of the material during the lead time.
- Nature of the material. Minimum level is not required in case of a special material which is required against customer’s specific order.
Maximum Stock Level
It is the maximum of stock which should be held in stock at any time during the year. The quantity is fixed so as to avoid... Continue reading "Inventory Management Techniques and Time-Keeping Methods" »