Part-Period Balancing
Part-period balancing attempts to select the number of periods covered by the inventory order that will make total carrying costs as close as possible to the set- up/order cost. When a proper lot size has been determined, utilizing one of theĀ above techniques, the reorder point, or point at which an order should be placed, can be determined by the rate of demand and the lead time. If safety stock is necessary it would be added to the reorder point quantity.
Reorder point =Expected demand during lead time + Safety stock
Thus, an inventory item with a demand of 100 per month, a two-month lead time and a desired safety stock of two weeks would have reorder point of 250. In other words, an order would be placed whenever the inventory level for that good reachedĀ 250 units.
Reorder point = 100/month Ć 2 months + 2 weeks’ safety stock = 250
Latest posts by BMS Team (see all)
- Meterdown Annual Festival is back with its 7th edition – Starts today! - January 16, 2020
- Tybms sem 6 results 2019 declared on 19th June 2019 - June 19, 2019
- TYBMS Sem 6 Results 2019 Update from BMS khabri! - June 15, 2019
13 Comments