Min-Max Inventory Control

Definition

Minimum, maximum and reorder quantity control for practical industrial use. This reference is designed for practical industrial stores, MRO, production and materials-management environments.

Objective

Set a lower control point and an upper replenishment target for practical stock management.

Scope

Apply the method at item, category, location or plant level as appropriate. The control should connect planning, purchasing, stores transactions, physical verification and management review.

Required Inputs

Minimum
maximum
current stock
open order
demand
lead time
safety stock.

Methodology

Define the business requirement, scope and review period.
Validate item master, consumption, stock and open transaction data.
Calculate or classify using the defined method.
Compare the result with criticality, supplier constraints and future demand.
Assign an action owner, due date and review frequency.
Monitor KPI movement and revise parameters when conditions change.

Formula / Control Logic

Reorder Quantity = Maximum Stock − Inventory Position. A practical Max can be Max Daily Consumption × Max Lead Time + Safety Stock.

Worked Industrial Example

If Max is 3,000 and inventory position is 1,900, practical ROQ is 1,100 units before MOQ/pack-size adjustment.

Decision Rules

Round to supplier pack size or approved order multiple.
Keep min/max parameters visible in ERP/MIS.
Review by ABC/FSN/VED class.

Industrial Controls

Authorized master-data and parameter changes
ERP transaction discipline and document traceability
Physical verification and reconciliation
Exception reporting with named ownership
Periodic management review of ageing, service and capital exposure

KPIs

Service

Availability, fill rate and stock-out performance.

Accuracy

Book-to-physical reliability and transaction quality.

Capital

Turnover, coverage, ageing, excess and dead stock.

Common Errors

Using max as an arbitrary large stock number.
Ignoring open PO.
Ordering below MOQ repeatedly.

Excel / MIS Application

Useful fields: Item Code, Description, UOM, Opening Qty, Receipt Qty, Issue Qty, Closing Qty, Unit Rate, Annual Consumption, Current Stock, Open PO, Lead Time, Safety Stock, ROP, Min, Max, ROQ, ABC, VED, FSN, Ageing, Action.

Management Review Questions

Which items require action now, and why?
Are open orders aligned with actual requirement?
Which exceptions are recurring and what is the root cause?
Which parameter should be changed, and what evidence supports the change?

Related Inventory References

Professional practice: A calculation is a control aid, not a substitute for engineering judgement, approved policy, physical verification or business-risk assessment.