1. Introduction to Max-Min Inventory Control System
Supply Chain Management
TITLE: max-min should be written in full, i.e. INTRODUCTION TO MAXIMUM AND MINUMUM INVENTORY CONTROL SYSTEM

2. Purpose of an Inventory Control System
To determine when stock should be ordered/issued
To determine how much stock should be ordered/issued
To maintain an appropriate stock level of all products, avoiding shortages and oversupply.

3. Vehicle Fuel Gauge Indicators
COMMENT: the slide should have title
You monitor your fuel consumption from time to time
You decide when to purchase more gas.
By assessing your supply status of the tank , you can calculate when to refuel and how much depending on your destination (perhaps your budget).
Drivers use the red warning area as a trigger of when to buy more fuel
Other drivers replenish the tank on a specific day of the week regardless of the fuel level to fill it up

4. Three Max-Min Inventory Control Version
Forced Ordering Max-Min Inventory Control System
Continuous Review Max-Min Inventory Control System
Standard Version Max-Min Inventory Control System

5. Storekeeper Decision Rule (Forced Ordering Version)
Review all stock levels at the end of each Review Period. Order enough stock to bring stock levels up to Max.
For example:
Review all stock levels at the end of each quarter. Order enough stock to bring the stock levels up to 6 months.

6. Definition of Review Period
The Review Period is the time scheduled for reviewing stock levels
It is also time for ordering commodities, so in the above example both the review period and the order interval is quarterly
Correct schedule to scheduled. Add in the above example after ‘so’

7. Definition of Emergency Order Point
The stock level at which an emergency order should be placed to avoid a stock out whether the end of the Review Period has been reached
EOP in Nigeria = 2 weeks (0.5 months)
Delete Emergency order point. Create separate slide for illustration transfer ‘EOP in Nigeria = 2 weeks (0.5 months)’ to the next slide

8. Storekeeper’s Decision Rule (Forced Ordering Version with Emergency Order Point)
Review all stock levels at the end of each Review Period. Order enough stock to bring stock levels up to Max.
If the stock level for any item falls below the Emergency Order Point before the end of the Review Period, place an emergency order.
Correct Storekeeper to Storekeeper’s
For example: 
Review all stock levels at the end of each quarter. Order enough stock to bring the stock levels up to 6 months. 
If the stock level for any item falls below 1 month at any time, place an emergency order.

9. Storekeeper’s Decision Rule (Continuous Review Version)
Review the stock level for each item every time an issue is made. If the stock level is at or has fallen below Min, order enough stock to bring the level up to Max.
Delete ‘Review the stock level each time an issue is made’ under example. Insert ‘the requirement for’ after ‘below’
For example: 
Review the stock level each time an issue is made. If the stock level is at or has fallen below the requirement for 3 months, order enough to bring the level back up to 6 months.

10. Differences from the Forced Ordering Version
In Continuous Review:
There is no fixed Review Period
The order is made when you reach Min
The storekeeper needs to know the Min
There is no Emergency Order Point

11. Storekeeper’s Decision Rule (Standard Version)
Review all stock levels at the end of each Review Period. For products which are at or have fallen below Min, order enough stock to bring stock levels up to Max.
If the stock level for any item falls below the Emergency Order Point before the end of the Review Period, place an emergency order.
Insert ‘’ requirement’ after 3 months
For example: 
Review all stock levels at the end of each quarter. For products which are at or have fallen below 3 months’ requirement, order enough stock to bring the stock levels up to 6 months. 
If the stock level for any item falls below 1 month at any time, place an emergency order.

12. Special Features of Standard Version
Standard Version is based on both a fixed review period and the minimum stock level
Compared to Forced Ordering which uses only the fixed review period, and the Continuous Review version uses the minimum stock level
Underline fixed review period

13. Summary of Decision Rules for all three versions
Forced Ordering Max-Min Version: Review all stock levels at the end of each Review Period. Order enough stock to bring stock levels up to Max.
Continuous Review Max-Min Version: Review the stock level for each item every time an issue is made. If the stock level is at or has fallen below Min, order enough stock to bring the level up to Max.
Standard Max-Min Version: Review all stock levels at the end of each Review Period. For products which are at or have fallen below Min, order enough stock to bring stock levels up to Max.

14. Formula for How Much to Order
Max stock quantity – Stock on hand = order/issue quantity
MSQ – SOH = QTO/I
Max stock quantity = average monthly consumption x max stock level
Average monthly consumption = average of the quantities of product dispensed to users or patients in the most recent three months, as appropriate

15. Calculating quantity to Order Exercise 1, Question 1- 10 minutes

16. Setting Maximum – Minimum Inventory Control System

17. Steps in Setting Max-Min Levels
Determine your Lead Time
Set the Review Period
Set the Safety Stock
Set the Minimum Stock Level
Set the Maximum Stock Level
Set the Emergency Order Point

18. Step 1 – Determine Lead Time
Lead Time is the time interval between ordering stock (or, in a push system, the time that the decision to send stock is made) and the time that received stock are ready for use.

19. Step 2 – Set the Review Period
For forced ordering and standard systems, review periods are often linked to reporting periods. For a continuous review system, the trigger for ordering is whenever products reach their min stock levels so there is no review period; but a review period can be set to establish a minimum period in which orders are processed.

20. Step 3 – Set the Safety Stock
Safety Stock is the buffer, cushion, or reserve stock kept on hand to protect against stockouts caused by delayed deliveries or markedly increased demand. It works for systems that have full supply.
>
Safety Stock
REVIEW PERIOD
STOCK LEVEL
1/2

21. Step 4 – Set the Minimum Stock Level
Forced Ordering and Continuous Review Versions:
MINIMUM
STOCK
LEVEL =
LEAD TIME
STOCK LEVEL +
SAFETY STOCK LEVEL
Where, when performance data are lacking, use this rule of thumb:
SAFETY STOCK LEVEL 
½ REVIEW PERIOD STOCK LEVEL

22. Step 4 – Set the Minimum Stock Level (Continued)
Standard Ordering Version:
SAFETY STOCK LEVEL +
LEAD TIME
STOCK LEVEL =
MINIMUM
STOCK
LEVEL
REVIEW PERIOD
Where, when performance data are lacking, use this rule of thumb:
SAFETY STOCK LEVEL 
½ REVIEW PERIOD STOCK LEVEL

23. Step 5 – Set the Maximum Stock Level
All Versions
MAXIMUM
STOCK
LEVEL 
MINIMUM
STOCK LEVEL +
REVIEW PERIOD STOCK LEVEL

24. Step 6 – Set the Emergency Order Point
For Forced Ordering and Standard Versions Only:
EMERGENCY ORDER POINT 
LONGEST LEAD TIME FOR EMERGENCY SHIPMENT

25. Setting max-min exercise 2 question 2 – 10 minutes

26. Any questions? Thank you!!