Materials & Inventory
Account for usable yield, pack sizes, lead times and the cash committed to stock.
topicStart with the decision
The amount you buy is not always the amount you can use. Separate the material needed for a job from the quantity you must order, then consider when replacement stock will arrive.
Calculate usable cost
Work through waste, usable yield and whole-pack purchasing.
Choose a reorder point
Connect demand during lead time with a stated buffer.
Check the order quantity
Round to supplier pack sizes using consistent units.
Check cash timing
Place the supplier payment in the week it is due.
Questions this topic covers
Is 20% waste the same as adding 20%?Is reorder point the same as order quantity?Which supplier has the lower usable cost?What if delivery takes three extra days?Does the bulk discount justify holding stock?Examples use hypothetical figures with checked arithmetic. Read the methods and limits.
Guides and examples
Inventory reorder point vs order quantity: a worked planning example
Calculate a reorder trigger from lead-time demand and a buffer, distinguish it from order size and test a supplier delay.
How to test a reorder point against supplier delays
Check demand during lead time, distinguish inventory position from stock on hand and test delay scenarios without inventing a service level.
Material yield, waste and pack sizes: calculate what you must buy
Calculate usable material cost and whole-pack orders, and distinguish yield loss from a percentage added to the required quantity.
How to compare supplier quotes using usable landed cost
Compare purchase price, freight, usable yield and pack sizes before deciding which supplier offer costs less.
