Teaching guide: inventory control chart

Highlights issues relating to inventory management such as the re-order level, re-order quantity, usage rates and lead time.

Model/theory

Key points

In the diagram above:

• inventory is re-ordered at 100 units (buffer stock)
• the re-order quantity is 500 units
• 500 units are used up each month
• a re-order is placed at 350 units
• the lead time (time from reorder to delivery) is 2 weeks.

When you can use this

When considering inventory management and factors affecting:

• the level of buffer stock
• re-order quantities
• re-order levels
• usage rates
• lead times.

You could also consider:

• what happens if usage rates increase unexpectedly
• what happens if inventory is too high or too low.

Where it's been used

• Q15, A-level paper 1 2018

• Q2, A-level paper 3, 2018

• Q17.1, A-level paper 1, SAM set 2

• Q17.2, A-level paper 1, SAM set 2

• Q6, AS paper 1, 2017

• Q9, AS paper 1, 2016

• Q10, AS paper 1, SAM set 1