Two-bin inventory system
A two-bin inventory system uses one quantity for normal consumption and a second quantity to cover use during replenishment, according to the system’s assumptions. Reaching the second bin triggers an order while the reserve supports demand until delivery. It is a simple physical control and still needs appropriate order quantities, reliable lead times and safeguards. It does not remove the need to review demand or record losses.
Worked example
When the first bin empties, a replenishment order is placed. The reserve bin contains enough for expected lead-time demand plus the chosen protection.
Common mistake
The second bin is not necessarily all excess or obsolete stock; it serves the replenishment interval.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Supporting | September 2026–June 2027 |
| FIA | FMA | Supporting | September 2026–June 2027 |