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Good Morning,
I am not sure what is the difference between the minimum order level and the buffer stock.
Would the Minimum inventory be equal to Min demand * Max lead time? Is there any formula for the Buffer inventory?
Many thanks!
Minimum level is the lowest quantity of stock that should be kept. This level warns the danger of stock out.
Buffer Stock/Safety stock will also calculated using minimum level formula
Minimum level = reorder level-(average usage x average lead time)
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