ABSTRACT
A large proportion of inventory control in a mature business will be the re-ordering of supplies from an agreed vendor, and begins with a communication that a further delivery is required. Supply has traditionally been based on the process of 'ordering' followed by 'delivery. No longer does a buyer act as a dealer, seeking a number of suppliers, negotiating price and delivery, and ordering one batch. Delivery quantities can be reduced in practice without incurring additional distribution costs. More frequent deliveries can give higher transport costs. If the costing is based on weight or size, then, of course, load size makes no difference to the cost and quantity reduction is easy. The delivery quantity is only determined by the amount needed until the next delivery. There are situations where the supplier imposes a minimum batch quantity, or a cost penalty, for ordering small quantities. Minimum order quantities, as set by suppliers, are generally arbitrary round numbers.
