Page 27 - 8025 - Controlling and locating stock Learner Guide.docx

ADVANCED

RISK MA
 The cost of the stock may be reduced.

Disadvantages of fixed period ordering are that:
 Stock may run out if demand increases unexpectedly

 Excess stock may build up if demand drops off unexpectedly.

Fixed quantity re-ordering involves a set quantity of stock being reordered when the re-order level
is reached.

In fixed quantity reordering there is:
 Maximum stock level

 Minimum stock level
 Re-ordering level

 Hastening level.

Maximum stock level
The maximum stock level amount of stock held to meet customer needs.

Levels above maximum stock levels should not be held as the stock may:
 Go out of date

 Deteriorate
 Cost too much to hold in stock

Minimum Stock level

The least amount of stock that should be kept in the warehouse to meet customers order.
The level at which an order should be placed to replenish stock.

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