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Last quarter one of my clients built a natural process of inventory control and recently they described it in the form of a guidelines. Subsequently, I found several requests including a discussion in a LinkedIN group for a rule of thumb for stocking levels. Well we know that things change with time and static rule of thumb may not serve the purpose. You need a process to allow you to have an acceptable level of inventory. Most often the decision is not how much inventory, it is about how do I have a process that addresses the dilemma of sometime having too less stock (stock out) and other time having too high stocks (expiries, non-moving stocks, returns, money locked).
Here is a sample of the description and question that I am often asked.