3. BUFFERSTOCK
‘Buffer stock’ or ‘strategic stock’ or ‘safety stock’ or ‘buffer inventory’ is
defined as a supply of inputs held as a reserve to uphold against unanticipated
shortages or demands. It is the excess inventory or safety stock, forming a cushion
of supply to safeguard during shortages.
Buffer stock may be found at all stages of the supply chain, and is intended to
reduce the occurrence or severity of stock-out situations and thus provide better
line continuity and/ or customer service. Buffer stock is used in production or
other inventory situations to ensure that exceptional or unpredictable shortages or
demands can be met with some degree of certainty . Safety stock is generally held
when there is uncertainty in the demand level or lead time for the product.
The amount of safety stock a business chooses to maintain regularly can
dramatically affect their operations. Too much safety stock can result in high
inventory carrying costs. Too less safety stock can cause repeated occurrences of
stock-outs. Hence, businesses need to maintain a fine balance and decide on the
amount of buffer inventory to be held.
4. PDS
(PUBLIC DISTRIBUTION SYSTEM)
PDS is a government-sponsored chain of shops entrusted with the work of
distributing basic food and non-food commodities to the needy sections of the
society at very cheap prices. Wheat, rice, kerosene, sugar, etc. are a few major
commodities distributed by the public distribution system.
The system is often blamed for its inefficiency and rural-urban bias. It has not
been able to fulfill the objective for which it was formed.
Moreover, it has frequently been criticized for instances of corruption and black
marketing. With a network of more than 400,000 Fair Price Shops (FPS), the
Public Distribution System (PDS) in India is perhaps the largest distribution
machinery of its type in the world.
PDS is said to distribute each year commodities worth more than Rs 15,000
crore to about 16 crore families. This huge network can play a more meaningful
role if only the system is able to translate into micro level a macro level self-
sufficiency by ensuring availability of food grains for the poor households.
5. MSP
(MINIMUM SUPPORT PRICE)
The FCI purchases wheat and rice from the farmers in states where there is a surplus
production . The farmers are paid a pre-announced price for their crops . This is called
Minimum support price(MSP).The MSP is declared by the govt. Every year before
the sowing season to provide incentives to the farmers for raising the production
of the crops.
The Minimum Support Prices were announced by the Government of India for the first
time in 1966-67 for Wheat in the wake of the Green Revolution and extended harvest, to
save the farmers from depleting profits. Since then, the MSP regime has been expanded
to many crops. Minimum Support Price is the price at which government purchases
crops from the farmers, whatever may be the price for the crops. The MSP is announced
by the Government of India for 25 crops currently at the beginning of each season viz.
Rabi and Kharif.