Different stocks are needed for different needs and different points of the supply chain.
Stocks can be divided based on their function and need as following:
Basic/use/cycle/lot size inventory
Basic stock, use of stock, cycle stock or lot size inventory is called part of inventory, which changes according to consumption and supplement rhythm.
Basic stock is thus the warehouse, which meets average or anticipated demand in continuing supplement interval time.
Safety stock ensures the availability during demand fluctuations, when you want to avoid shortage situations. The need for safety stock depends on the size of demand fluctuations and on the service level target set for stock.
Safety stock is thus part of the stock, which secures inventory service when demand varies. Safety stock increases the average storage levels and thus increases the amount of capital tied up in the stock, so the need and amount of the safety stock should be calculated carefully and unnecessary safety stock should not to be kept.
Buffer stock is a stock with to prepare for, for example, supplement delivery delays or problems with product/raw material supply. Buffer stock is, therefore, a stock which secures operation despite the uncertainty in supplement deliveries.
Sometimes, also in case of demand fluctuations safety stock is called a buffer stock.
Pipeline inventory/production intermediate storage
Pipeline inventory means, for example, a storage used in transport, production or distribution. A stock used in various stages of production is called intermediate stock/storage.
In industry, the number of pipeline inventories depends on production lead time as well as how many products are being manufactured in different phases of production awaiting for the next manufacturing phase. Pipeline inventories can be minimized by pull control (imuohjaus/JIT).
The reasons for seasonal stock are caused by seasonal fluctuations in demand. With the seasonal stock, production intended to be as steady as possible to manufacture product evenly although the demand is seasonal. With this, production lay-offs, over time work can be avoided and it ensures that the product can be manufactured, the amount equivalent to demand.
Storage/Warehouse type classification
Storages are classified according to the type of storage. Storage types include:
- Outside storage
- Unheated storage
- Warm storage
- Cold storage
- Frozen storage
- Special storage