Min-Max Inventory Supply Chain Strategies

Min-max inventory strategy is a method used in supply chain management to determine the optimal inventory levels for a product. The strategy involves setting a minimum and maximum inventory level for each product and regularly monitoring inventory levels to ensure they remain within the set range.

The minimum level is the lowest point at which an order for the product must be placed to avoid stockouts, while the maximum level is the highest point at which an order should be placed to avoid excessive inventory buildup.

The goal of the min-max inventory strategy is to balance the costs of holding inventory with the costs of stockouts by keeping inventory levels at the most efficient point.

This strategy also known as (R, Q) system, which is determined by two parameters: R is the reorder point and Q is the order quantity.

The reorder point (R) is the level of inventory at which a new order should be placed, and the order quantity (Q) is the amount of inventory that should be ordered.

This strategy can be improved by using forecasting techniques to predict demand and safety stock to account for uncertainty.

Supply Chain Management Quotes

• “Make inventory a common enemy for your company.” ~Dave Waters
• “Where there is no Standard there can be no Kaizen.”  ~Taiichi Ohno
• “I say an hour lost at a bottleneck is an hour out of the entire system. I say an hour saved at a non-bottleneck is worthless. Bottlenecks govern both throughput and inventory.”   ~ Eliyahu M. Goldratt, The Goal
• “The line between disorder and order lies in logistics…”   ~Sun Tzu
• “If you can’t describe what you are doing as a process, you don’t know what you’re doing.”  ~W. Edwards Deming
• “Focus on the lowest total cost of ownership not the lowest price.” ~ EverythingSupplyChain.com
• “If you think of standardization as the best that you know today, but which is to be improved tomorrow; you get somewhere.”  ~ Henry Ford, founder Ford Motor Company
• “Eighty-five percent of the reasons for failure are deficiencies in the systems and process rather than the employee. The role of management is to change the process rather than badgering individuals to do better.” ~ W. Edwards Deming
• “If you don’t have an essential item that puts people into chaos.  What happens if the coffee runs out in the morning?  Simple but you get the picture.”  ~ EverythingSupplyChain.com
• “The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner, not in spurts.” ~ Taiichi Ohno
• “Great leaders are almost always great simplifiers who can cut through the argument debate and doubt to offer a solution everybody can understand.”  ~ Colin Powell
• “If you can me time to fix problems you can make time to plan so problems don’t occur.” ~ Dave Waters

Inventory Management Resources

• Calculating Safety Stock: Protecting Against Stock Outs.
• How Amazon Receives Your Inventory.
• Inventory Management Training in 3 minutes – ABC Classification.
• Managing Inventory Flows in the Supply Chain.
• SCM Collaboration on Social Media.
• SCM Resources by Topic & Supplier
• Supply Chain Master: Professor Hau Lee on the bullwhip effect.
• Supply Chain Quotes: Take it to the next level.
• The Beer Game – Supply Chain Management.
• The Bullwhip Effect 101.
• What is Supply Chain Management?