I made short presentation about what is logistics and how does it affect on your business and it’s finances.
Now that we have decided our order quantity and safety stock we can figure out when to reorder. Inventory can be supplemented in many ways. For example:
So far we have decided our optimal order quantity and safety stock. Safety stock is one way to satisfy variable demand but could we lead inventory from the value of the demand? Safety stock is based on service level but now we will calculate stock amount from products sale and ordering price.
We have now solved the optimal order quantity. When is this order supposed to do? Can we end up in the situation that we have to sell zero stock? In this post we will figure out what is safety stock and why you should have it.
EOQ-function was first created for manufacturing industry. It was originally founded by Ford. W. Harris in 1913. He discovered that when manufacturing line was set from one product to another there will always be condemned production and time is spent to make new settings. On the other hand bigger manufacturing batches need more capital and storage room.