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Stock Keeper

You run the stockroom for twelve weeks. Each week you decide how many boxes to order, and orders take two weeks to arrive. Run out and you lose sales; order too much and storage eats your budget. A promotion is coming, so watch the forecast.

MediumProcurement3 minNew

How to play Stock Keeper

Each week shows stock on hand, stock already on order and the demand forecast. Pick an order size and press Confirm. Demand arrives, sales are made and the week’s cost is added up.
Holding a box costs $1 a week, a lost sale costs $6 and every order costs $40. At the end your total cost is compared with a simple reorder rule on the same twelve weeks of demand. Beat it for a bonus.

The three costs of inventory

  • Holding cost. Every box on the shelf ties up cash, space and insurance, and some stock goes out of date.
  • Stock-out cost. A missed sale loses the margin and often the customer. For many businesses this is the most expensive of the three.
  • Ordering cost. Every purchase order takes time to raise, approve, receive and pay. Ordering in tiny amounts every week multiplies that cost.

The reorder point

The classic rule is simple: reorder when the stock you have plus the stock already on order falls below the demand you expect during the lead time, plus a safety buffer for bad weeks. With a two-week lead time, today’s order can only help from two weeks out, so you always plan ahead of what you see on the shelf.
Forecasts matter most around known events. A promotion doubles demand for a short time, and the order for it has to go in before the shelf looks empty.

Where to learn more

The procurement guides cover supply chain planning, supplier management and cost reduction. Try Negotiation Duel next, or browse Kurums Tools.

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