Can anyone guide me through MInimax Stock Levels for Replenishment planning?
Pranshu, I use Min/Max for spare parts in road constuction equipment industry. This works the same way for both Kanban (pickface and bulk storage) as well as branch replenishment from head office or supplier. 1. You should know your forecast – usually our average requirements per month. You can calculate this from Total usage divided by number periods (eg: total for year divided by 12 months). 2. Establish your SAFETY STOCK – which is the LOWEST point that your inventory should be with normal replenishment. I usually set Safety at 1 month’s stock for parts, but this differs for different industries, and depends on your supply chain and storage capacity. 3. Establish MINIMUM stock – a common misconception is that this is your Safety stock, and this is where people run into problems. MINIMUM should really be your reorder point (unless your computer system can handle this additionally). Minimum stock (or reorder point) is based on the Safety stock plus the requirements for the time it tak
