Appendix C

March 2000 Created for V3.9 from previous manual.

Return to Index or go to next page.(Appendix D)

Stock Control

The maximum stock and the minimum stock are determined by experience, the frequency of orders, the time taken for the goods to arrive, the reliability of the supplier etc. These numbers are a guide for your operations. For efficient stock control the lowest stock numbers should be kept but still supplying demand. Excess stock results in interest costs on the goods held and insufficient stock can result in lost sales.

The minimum stock number is used to indicate when stock is running short. The maximum stock is used to estimate order size.

The minimum stock number should be set to the estimated number of sales between placing the order and the goods arriving plus a small safety margin. the maximum stock number is the estimated number of goods sold between orders plus the minimum stock numbers.

Example:

A shop is open 7 days selling 20 items of 'ABC' each day. The shop places an order each week and the goods take 2 days to arrive. The minimum stock would be:

20 items/day x 2days + One days sales safety margin (you may use more or less) = 40 + 20 = 60

The maximum stock is:

20 items/day x 7 days + 20(safety margin) = 140 + 20 = 160

Note.

This does not allow for special events, seasonal or daily variation that will change the demand. These levels are only used as a guide in making your orders. You may have to round up or down for the packet or order size.

If you only want to stock one item set both the maximum and minimum to 1.

If the goods are discontinued or you no longer will stock the items set the maximum and minimum to zero.

Return to Index or go to next page.(Appendix D)