Do You Monitor Your Residual Inventory?
- Topics:
- Inventory Management
- Tags:
- Analysis,
- Finance,
- Investment,
- Monitor,
- Stock
- Source:
- Effective Inventory Management
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Overview: There are two questions a buyer must answer in replenishing the stock of a product: when to place a replenishment order, and how much of a product should be reordered. Economic lots, price break analysis, and the economic order quantity formula provide the answer to how much to order that minimizes the company's cost of inventory. The new measurement, day's supply on-hand when a replenishment shipment is received (residual stock), helps to ensure that we are ordering at the right time. The article concludes that while residual stock analysis doesn't provide a measurement that can be compared to other company's results, it does bring to the attention of the buyer products that have the potential of turnover improvement. Or that may be hindering customer service that is, it is a valuable tool for the company to achieve its goal of effective inventory management.
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Format: HTML | Date: Jan 2000 | Pages: 1
