Stock Control Charts
- Levels: AS, A Level
- Exam boards: AQA, Edexcel, OCR, IB, Other, Pre-U
The overall objective of stock control is to maintain stock levels to that the total costs of holding stocks is minimise. A popular method of implementing stock control is through the use of stock control charts and algorithms that automate the process.
An example of a traditional stock control chart is shown below:
The key parts of the stock control chart are:
- Max level of stock a business can or wants to hold
- Example chart: 800 units
- Acts as a trigger point, so that when stock falls to this level, the next supplier order should be placed
- Example chart: 400 units
- Amount of time between placing the order and receiving the stock
- Example chart: just under a week
Minimum stock level
- Minimum amount of product the business would want to hold in stock.
- Assuming the minimum stock level is more than zero, this is known as buffer stock
- An amount of stock held as a contingency in case of unexpected orders so that such orders can be met and in case of any delays from suppliers
Factors Affecting When / How Much Stock to Re-order
Lead-time from the supplier
- How long it takes for the supplier to deliver the order
- Higher lead times may require a higher re-order level
Implications of running out (stock-outs)
- If stock-outs are very damaging, then have a high re-order level & quantity
Demand for the product
- Higher demand normally means higher re-order levels
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