Inventory management

Stock control is best explained using a diagram, for example a bar gate stock graph:

Bar  gate stock graph showing minimum/maximum inventory level, re-order quantity, lead time and buffer inventoryBar gate stock graph
  • Maximum inventory level: the largest amount of items to be stored on site (500).
  • Minimum inventory level: the lowest amount of items to be stored on site (100).
  • Re-order quantity: the amount of stock ordered to restore inventory levels to their maximum point (400).
  • Re-order level: the level of inventory at which new stock is ordered (300). 400 items are ordered and it takes two weeks lead time for ordered stock to arrive.
  • Lead time is the amount of time taken between ordering stock and the stock being delivered.
  • There is always a buffer inventory of 100 items held in case deliveries are held up or there is an unexpected large order.