Safety stock is an extra quantity of an item held in inventory to reduce the risk of stockouts. It acts as a buffer to account for uncertainties in demand, supply, or lead times. Safety stock helps prevent stockouts and ensures operational efficiency. It avoids lost sales, maintains production continuity, and reduces the need for expedited […]| Cash Flow Inventory
A reorder point (ROP) is the minimum inventory level that triggers a replenishment order for a specific item. In essence, it’s a signal that says, “It’s time to restock!“ Reorder Point helps maintain optimal inventory levels. It is crucial as it avoids stockouts, optimizes inventory levels to reduce costs and spoilage, and improves cash flow […]| Cash Flow Inventory
Inventory optimization is the strategic process of managing stock levels to meet customer demand while minimizing costs and maximizing profitability. It involves balancing the right amount of inventory – not too much to incur high holding costs, and not too little to avoid stockouts. Effective inventory optimization relies on data analysis, forecasting, and efficient supply chain management to streamline […]| Cash Flow Inventory
Overstocking refers to having more inventory than necessary to meet customer demand. Overstocking ties up cash and increases costs for both operations management and holding rents. As a result, your profitability is reduced. Overstock is also referred to as excess stock, excess inventory, stock surplus, or surplus inventory. Understocking means that you do not have […]| Cash Flow Inventory
