Stock on hand
Having seen how demand affects inventory planning, now let’s assume the same forecast:
|#||Month 1||Month 2||Month 3||Month 4||Month 5||Month 6||Total|
|Forecasted sales (units)||4||5||7||3||4||6||29|
However also assume that we already have 5 widgets in stock (
stock on hand = 5).
In this case the amount of stock we need to order is simply the total forecasted demand less what we already have.
Requirement = total_forecated_demand - stock_on_hand = 29 units - 5 units = 24 units
Nothing too taxing there, so let’s see how supplier lead times work.