5.6.3 (HL)—Stock control charts

Stock control charts track inventory over time, showing maximum, reorder and minimum levels; the reorder point should allow for lead time and demand uncertainty.

Usage, delivery reliability and safety stock determine when to order. A chart is useful only if data and lead times are current.

Read the stock level against reorder and minimum lines, then explain the consequence of ordering now or later.

If stock falls to the reorder level while supplier lead time is ten days, the order should cover expected demand plus safety stock for variability.

A reorder line is not a guarantee against stockout when demand or delivery changes.

Read the four specified quantities precisely. Lead time is the interval between placing and receiving an order; buffer stock is the minimum reserve against uncertainty; reorder level is the stock level that triggers an order; reorder quantity is the amount ordered, shown by the vertical rise when delivery arrives. With steady demand, reorder level = expected demand during lead time + buffer stock. If usage is 20 units per day, lead time is 5 days and buffer stock is 30 units, reorder at 20 × 5 + 30 = 130 units. An order of 200 units is the reorder quantity; it does not mean the reorder level is 200. Interpret sloping falls as usage, vertical rises as deliveries, and test whether changing demand or lead time makes the settings unsafe or unnecessarily costly.