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Essentials of Inventory Management, 2nd Edition by Max MULLER

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CHAPTER 5PLANNING AND REPLENISHMENT CONCEPTS

The objective of this chapter is to provide basic approaches to forecasting inventory levels and to undertaking stock replenishment. With the proper techniques, you will have the right item, in the right quantity, at the right time, and in the right place.

Replenishment Costs

As discussed in Chapter 2, every day that an item remains in your stockroom costs you money in the form of a carrying cost (K Factor). If you take that concept to its extreme, it would make sense to only buy items exactly when you need them. Multiple smaller quantity purchases of the same item certainly hold down your carrying costs. However, it hurts your cost of replenishment—the expenses associated with buying things.

It costs ...

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