3.7 Summary

Stock is held to provide availability of product. It also is needed:

• because supply is frequently not continuous;

• as a buffer between processes;

• because it is in process or in transit;

• as a contingency against unpredicted variability in demand and supply.

Stock records maintain a record of:

• physical stock;

• free stock;

• allocated stock.

Free stock may be negative.

Warehouse operations handle:

• stock receipts, including checking and putting away;

• storage, including security and protection of goods in the appropriate environment;

• maintenance of first in first out, dates and batches;

• picking, marshalling, packing and despatch.

Stock can be accounted for by:

• actual cost (as manufactured or purchased);

• average cost;

• standard cost.

Primary stock provides for availability between replenishment.

Replenishment may be based on fixed delivery frequency to a fixed or variable stock level or imprest.

It may also be based on a fixed order quantity.

The reorder level = usage lead time + safety stock.

EQC = ?[2(ordering cost usage) (unit holding cost)].

EOQ may be adjusted to allow for:

• quantity discounts;

• replenishment from production over time.

Safety stock provides for contingency against:

• variability of demand;

• variability of supply;

• variability of order trigger.

Setting safety stock = Z ?? l is a useful starting guide.

When stock is held in more than one location, the level of primary stock is unchanged; the level of safety stock increases with ?(number of locations).