buffer inventory, reorder level + lead time

• What is the buffer inventory?

  The minimum amount of inventory held
• Why do businesses hold buffer inventory?

  To manage potential problems in supply
• What does lead time refer to?

  Time from ordering to arrival of supplies
• What is the purpose of lead time in inventory management?

  To ensure supplies arrive before inventory runs out
• What is reorder level in inventory management?

  The amount of inventory that triggers a new order
• Why is reorder level important for businesses?

  It helps prevent stockouts and ensures supply
• What does reorder quantity refer to?

  The amount ordered each time inventory is replenished
• How does reorder quantity affect inventory management?

  It determines how much stock is replenished
• What are the key components of inventory management discussed?

  • Buffer inventory: minimum amount held
  • Lead time: time from order to arrival
  • Reorder level: triggers new orders
  • Reorder quantity: amount ordered each time
• What happens if new inventories arrive after the buffer level is reached?

  They arrive before the business goes below buffer
• What is the consequence of not maintaining proper reorder levels?

  It can lead to stockouts and lost sales
• How often is reorder quantity determined?

  Each time inventory is replenished
• Why is it crucial for businesses to monitor lead time?

  To ensure timely replenishment of inventory
• How do buffer inventory and reorder level work together?

  Buffer inventory prevents stockouts; reorder level triggers orders