Min/Max |
The min/max (minimum/maximum) inventory system is used for items whose usage is constantly changing. Whenever the inventory on hand reaches the user-defined minimum stocking level or reorder point, an order is placed for a quantity large enough to reach the maximum stocking level. You can set different minimum and maximum levels for each class of items or for individual items.
The main difference between the min/max and Economic Order Quantity (EOQ) systems is that order size can be varied based on need. The EOQ system assumes that demand is steady and constant.
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