Stock Control Methods

by Vanessa Cross; Updated September 26, 2017

Stock control for production scheduling and ordering inventory is a core part of managing a business enterprise. Warehouse managers use a variety of stock review techniques that can range from the most simple to complex models. The goal of any stock control method, however, is to maintain efficient inventory and production levels that ensure that products and goods are replenished in a timely manner and that profits are maximized by avoiding overstocking and under-stocking.

Basic Forecasts

A simple stock order forecast reviews historical data to measure demand patterns to determine the number of days it takes for a particular quantity of an item to sell or be consumed. The forecast then calculates the number of days it takes replenish the items through either production or supplier delivery. Warehouse managers who understand how quickly an item sells or is consumed and the amount of time it takes to receive a delivery or replenish through production can identify the stock amount that triggers a reorder, also called an order point.

Just In Time

Just in time, or JIT, is a cost-cutting inventory control method used frequently in the manufacturing industry to maintain the absolute minimum stock levels. Inventory is ordered when it is needed with the goal of reducing holding or carrying costs. The reliability of a supplier's delivery times is central to efficient JIT operations. If supplier delivery times are not predictably consistent, warehouse management will not be able to use this important factor in JIT forecasting and runs the risk of frequent stock shortages.

Inventory Control Software

Inventory control software automates warehouse stock systems and helps managers to track inventory levels. Stock control software programs generally include systems that notify managers when stock items fall below order points. When order points are triggered, computer tracking systems can place reorders using economic order quantity, EOQ, or fixed order quantity, FOQ, frameworks.

Fixed Order Quantities

When an order point occurs, an FOQ is a specific inventory quantity used in stock control administration. Absolute supply quantity and time supply quantity are two kinds of FOQs. An absolute supply quantity directs that a specific number of items be reordered when an order point is triggered. A time supply quantity directs that a specific number of days' supply of an item be reordered.

Economic Order Quantity

Economic order quantity, or EOQ, is a stock control and production scheduling method that aims to establish stock quantities at the lowest possible costs. The EOQ formula uses factors such as a stock item's fixed cost, annual turnover rate and storage and delivery costs to make complex calculations that establish the optimal stock level for an item.

About the Author

Vanessa Cross has practiced law in Tennessee and lectured as an adjunct professor on law and business topics. She has also contributed as a business writer to news publications, including the "Chicago Tribune," and published in peer-reviewed academic journals. Cross holds a B.A. in journalism, a Juris Doctor and an LL.M. in international business law.

Photo Credits

  • Jupiterimages/ Images