ABSTRACT
The term “supermarket” refers to inventory that is managed in a way that facilitates a pull replenishment system. With a properly managed supermarket, the pull system goals of preventing overproduction and of synchronizing flow to customer demand are being met. Manufacturing is permitted to produce only the amount that has been removed from the supermarket. Supermarkets are needed only where inventory is intentionally being maintained to cover the cyclic nature of replenishment, which includes most raw material inventories, make-to-stock finished goods inventories, and work in progress to cover progression through a multiproduct cycle. Fixed quantity replenishment is an alternative to fixed interval and is used when there is some benefit in buying or producing materials in specific quantities. In the process industries, some materials are received in tank trucks, so transportation economics suggest buying in truck quantities. Safety stock is inventory carried to prevent or reduce the frequency of stockouts, and thus provide better service to customers.
