Tag Archive: inventory

Oct 28 2010

Why Shortage vs. Stock is Not Really a Tradeoff

I have repeatedly come across factories that keep a lot of on-hand safety stock, and found that material shortage is among the top reasons of unexpected production downtime. The same goes for retail operations that have kept safety stock levels arbitrarily high. More often than not, shortage is not reduced by increasing stock levels. At first glance, this may seem counter-intuitive.

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