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Stock Control Charts

A stock control chart visually represents stock management over time, featuring key elements such as maximum stock level, re-order level, lead time, minimum stock level, and buffer stock. The maximum stock level indicates the highest quantity a business aims to hold, while the re-order level triggers new orders to prevent stock depletion. Buffer stock serves as a contingency for unexpected demand and supplier delays.

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Samm Dass
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100 views2 pages

Stock Control Charts

A stock control chart visually represents stock management over time, featuring key elements such as maximum stock level, re-order level, lead time, minimum stock level, and buffer stock. The maximum stock level indicates the highest quantity a business aims to hold, while the re-order level triggers new orders to prevent stock depletion. Buffer stock serves as a contingency for unexpected demand and supplier delays.

Uploaded by

Samm Dass
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Stock control charts

A stock control chart is a graphical illustration of a simple approach to stock


management over time. This ‘saw tooth’ shaped diagram is normally shown as if
sales were steady throughout each month. Whilst this oversimplifies the situation
for many businesses, the principles can be adapted to most situations.The key
features and terms are:

 Maximum stock level – this is the maximum amount of stock a business


would wish to hold. This could represent enough stock for a month or a
week, it might be as much as the warehouse has space for, or it might
depend on the order size needed to qualify for a quantity discount – known
as the Economic Order Quantity (EOQ). On the diagram below, the
maximum stock level is 600 units, and the usual order quantity is 500 units

 Re-order level – this acts as a trigger point, so that when stocks fall to
this level, the next order should be placed. This helps take account of
fluctuations in sales levels over time. When an order is placed, there is a
lead time that the supplier needs to meet that order. Ideally this new order
will arrive just before stocks fall below the minimum stock level. On the
diagram below, 300 units

 Lead time – the amount of time between placing the order and receiving
the stock On the diagram below, just under two weeks

 Minimum stock level – this is the 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 – see below. On the diagram
below, 100 units

 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.

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