Two-Bin Inventory Control

What Is Two-Bin Inventory Control?

Two-bin inventory control is a system used to determine when things or materials utilized in production ought to be renewed. At the point when things in the principal bin have been exhausted, an order is put to top off or supplant them. The subsequent bin is then expected to have an adequate number of things to last until the order for the main bin shows up. In short, the principal bin has a minimum of working stock, and the subsequent bin keeps reserve stock or remaining material.

The two-bin inventory control method is likewise sometimes alluded to as kanban, which is emphatically associated with the just-in-time (JIT) method of a manufacturing cycle.

How Two-Bin Inventory Control Works

Effectively managing stock levels is perhaps of the greatest test that companies face. Not having enough inventory can bring about missing out on sales opportunities and losing out to contenders. Holding too much stock, then again, increases the possibility of damage, spoilage, theft, and falling casualty to shifts in demand. It additionally means higher storage costs and deferrals recouping money from purchased goods to reinvest in the business.

The two-bin inventory control system is a fundamental technique used to guarantee that companies reduce these risks and consistently have, pretty much, the right level of stock to fulfill need without overdoing it.

In its least complex form, the cycle can be broken down like this:

• The primary bin is put on top or in front of the subsequent bin.
• A reorder card is put on the lower part of the two bins.
• Stock is taken from the more open first bin.
• At the point when the main bin is vacant it is supplanted with the subsequent bin.
• The reorder card is utilized to restock the main bin.
• At the point when the ordered stock shows up it is put in the vacant bin and the cycle rehashes the same thing.

This system is extensively employed across various industries that involve manufacturing operations and is likewise effective for hospital inventory control.

Special Considerations

Two-bin inventory control is quite often utilized for small or low-esteem things that can be handily purchased and stored in bulk. Conversely, higher-esteem things are subject to the perpetual inventory system.

In addition, depending on historical examples of variance in the depletion rate of the working stock (bin no. 1), the amount ordered for the reserve stock (bin no. 2) can be adjusted.

It is essential that the new order set after the main bin is discharged shows up before the subsequent bin is vacant, if not, the interaction doesn't fill in as intended. The inventory approach utilized for the two bins is first in, first out (FIFO), given that the inventory put in the main bin is likewise the inventory that is first sold.

As a general rule, the following calculation is utilized to determine how much inventory to keep in the reserve stock bin:

(Daily use rate * lead time) + safety stock

Illustration of Two-Bin Inventory Control

Company A will be a small manufacturer that goes through different types of stray pieces to sort out its products. Clasp are among the numerous things it orders from outside providers. It utilizes around 800 of them each week, or 160 every day, with a lead time — the period between the beginning and completion of a production cycle — of three days.

According to the primary calculation above, company A's reserve bin ought to stock something like 480 clasp. In any case, management is likewise aware that use levels can sometimes vacillate by as much as 15%, so as a careful step decides to add a few additional clasp to its reserve storage bin. This safety stock could prove to be useful on the off chance that demand picks up and production rates increase, as they have in the past.

Features

• Two-bin inventory control is quite often utilized for small or low-esteem things that can be handily purchased and stored in bulk.
• Two-bin inventory control is a system used to determine when things or materials utilized in production ought to be renewed.
• At the point when things in the principal bin have been drained, an order is set to supplant them. During the stand by, things from the subsequent bin are utilized.
• The two-bin inventory control system guarantees that companies reduce inventory risks and consistently have the right level of stock to fulfill need.
• Bin cards and store ledger cards are utilized to record the inventory.