Setting min and max levels that stop being wrong

A minimum level triggers a reorder. A maximum caps what you hold. Most were set when the system was installed, by somebody guessing, and have never been reviewed since, which is why the same parts run out and the same parts gather dust.

The calculation

The minimum should cover usage during the lead time, plus a buffer sized to the consequence of running out.

A filter used 2 a month with a 3 week lead time needs about 1.5 during lead time. Round up and add a buffer for a low-consequence item: minimum 3. Maximum at roughly three months of usage: 6.

The same arithmetic on a critical seal with a 12 week lead time and usage of 1 a year gives a minimum of 1, and the buffer decision is everything. If the machine stops the line, hold 2.

Size the buffer by consequence, not by a blanket rule

A single safety stock percentage applied across a storeroom is the most common way this goes wrong. It over-stocks the trivial items and under-stocks the ones that matter. Three bands is enough: none for low consequence, one lead time of cover for medium, and a deliberate decision for critical.

When to ignore the formula

• •Parts with almost no usage history, where judgement about consequence is all you have
• •Anything with a shelf life, where the maximum is set by expiry rather than by usage
• •Items only available in a pack size, where the maximum is whatever the pack contains
• •Anything being discontinued, where a last-time buy is a different decision entirely

Review annually, from what actually moved

Once a year, list every part with its issues over the last twelve months and its current levels. Three groups appear immediately: parts that ran out, parts that never moved, and parts sitting far above their maximum. Each group has an obvious action and the whole review takes an afternoon.

Watch for the reorder nobody actions

A minimum level only works if hitting it produces an order. In plenty of storerooms the alert fires into a report nobody opens, and the level is blamed when the process is at fault. Check that the last ten reorder triggers actually resulted in a purchase before adjusting a single number.