Safety Stock & Re-order points – simple explanation

Safety stock is the additional number of units of stock held by a company to mitigate several market risks. Without safety stocks, the company could have negative customer experience, lost revenue, lost market share and long-term customer value. However, a higher safety stock strains the organization in the form of higher working capital requirement. Safety …

Continue reading Safety Stock & Re-order points – simple explanation

Inventory Management, Inventory Costs, Newsvendor vs. EOQ

Different models are used to manage inventory for products that are continually available (like milk) or products available for limited time (like seed).The Economic Order Quantity (EOQ) model determines the least cost level of inventory to carry, as well as costs. News Vendor models are used for products only available for a single period. EOQ …

Continue reading Inventory Management, Inventory Costs, Newsvendor vs. EOQ