TLIA4028 - Comprehensive Report on Assessing Stock Levels

This report provides an in-depth assessment of optimum stock levels, emphasizing the quantity of stock required to meet normal requirements. It evaluates projected demand using previous records and statistical tools like regression analysis. Variables impacting stock levels, such as lead time, annual consumption, stock-holding costs, and ordering costs are examined. Contingency situations and their effects on manufacturing practices are discussed, along with methods for determining optimum stock levels, including demand forecasting, inventory tracking systems, effective communication, and reorder points. The report also covers monitoring inventory levels using techniques like Just-in-Time, inventory audits, and safety stock. Legislative implications, specifically the Occupational Safety and Health Act of 1970, and warehouse layout considerations are also addressed. The report concludes that demand forecasting is vital, and optimum inventory levels can be maintained through reorder points and safety stock while adhering to safety legislation and optimizing warehouse layout.

TLIA4028- ASSESS AND MONITOR
OPTIMUM STOCK LEVELS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAN BODY....................................................................................................................................1
Evaluating projected demand.......................................................................................................1
Variables which will impact optimum stock level.......................................................................1
Contingencies...............................................................................................................................2
Determining optimum stock levels..............................................................................................2
Monitoring optimum inventory levels.........................................................................................3
Legislation....................................................................................................................................3
Layout of warehouse....................................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCE...................................................................................................................................6

INTRODUCTION
Optimum stock level denoted with the quantity of stock required to match up with the
normal requirements related to stock. This report will give emphasis over the concxept of
optimum stock level for the organisation. Impacts of different variables over the optimum level
of stock will also discuss in this project. Furthermore, description regarding the legislative
implications associated with maintaining the optimum stock level will be discussed.
MAN BODY
Evaluating projected demand
Projected demand is known as identifying the expected amount of material requirements
for managing estimated supply of products in the market. The practice of evaluation in context
to the projected demand average consumption related to raw material is assessed. Previous
records and statistics over material consumption are analysed by the professional so that
expected level of need and demand of raw material can be identified by the professionals.
Understanding market in which company is dealing is also necessary while evaluate about the
projected demand for the respective time period. Understanding market play role in identifying
about the trend in market related to increase market use of the end product. Example to
determine the demand of 20 M long rubber garden hoses it is important to conduct market
research so that company will get idea about the projected demand (Taleizadeh and Moshtagh,
2019). Certain statistical tools like regression analysis is also used to ascertain the reasons of
changes in previous demands. On the basis of the changing trend in demand and previous
consumption records professionals try to identify the projected demand of the product.
Impact of variables on optimum stock level
Variables are demonstrated as the different factors that influence the evaluation process
of the optimum stock level need to maintain by the company. Following are the components
required to address for identification of the optimum level of material stock company need to
maintain for meeting up business objectives.
Lead time-
It refers to time difference between the order placed and the actual delivery received.
Demand and supply in the general market also influence the lead time for the organisation.
Annual consumption-
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This is a value or the total number of units company require to deliver the expected
demand in the respective target market. The term itself indicate about the annual level of
demand of material company will seek in order to produce the final unit or production in target
market.
Stock-holding costs-
it consists of stock which includes insurance, warehouse space, interest on capital
associated with stock etc. This is a cost incurred for keeping the stock in warehouse in its
original capacity.
Ordering cost
The term itself denote the fact that this is a cost requiire to make an order to the supplier
regarding raw material. The cost include purchase cost, labour cost and such like cost.
Contingencies
Contingency is defined as the future possible event. This is furtehr demonstaretd as an
unavoidable future event that was not expected but has occurred due to some unavoidable
circumstance. The distribution company is taking more time in manufacturing rubber garden
hoses and due to this they can even loose their potential customers. It is also found that they are
not having proper storage facility (Costantino and et.al., 2018). As the storage facility which
they are having is not essential to store large inventory. So due to this problem, inconvenience is
faced by the company staff in storing inventory. Raw materials are stored in clean and dry place.
When inventory is stored in untidy area then there are chances that raw material will get
destroyed and businesses have to face huge losses. Contingency situation resist the
manufacturing practices adopted by the organisation. The effect of this is over the capacity,
efficiency and effectiveness of the business venture to produce the finished good in market.
Determining optimum stock levels
Demand forecasting- it is one of the best method to check the need of inventory. It is important
to make predictions of sales so that company can find out that how much stock is required
within specific period.
Inventory tracking system- help distribution company to know the stock quantity available.
This system provides real time access to the level of inventory available at logistics centre.
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Effective communication- having clear communication with supplier will help company in
managing inventory. Communication is maintained with the employees, management, logistic
manager, supplier and other necessary stakeholder to maintain the proper quantity in the stock.
Reorder points- it means the minimum inventory which tells business when is the time for
reorder inventory. With the help of lead times and customer demand one can set reorder
quantity. There are many application available which will automatically provide notification to
the manager when the level of inventory reaches to reorder point.
Monitoring optimum inventory levels
Just in time- is the technique use when company receive raw material from its suppliers as and
when they are required. This is a system use in context to such stock that are easily available in
market and supplier will not require any time to deliver the stock.
Inventory audits- it is also called as warehousing audit method. It is the time-consuming
process especially when company is dealing with large inventory although with the help of this
process, company get to monitor the inventory (Al-Momani and et.al., 2020). Techniques like
LIFO, FIFO and average method of inventory control is use in this technique.
Safety stock- is a stock level maintained by the organisation to meet the stock demand belong to
such time that was taken by suppliers to deliver the stock. This is a stock level maintain by the
organisation to sustain production in between the time order is placed and the time supplier
actually deliver the ordered stock level.
Legislation
Occupational safety and health act 1970-
This law has provided workplace standards to make sure that workforce get to protect
against hazards or dangerous situations which can impact their health safety. As per this law it is
mandatory for the management to ensure that health and safety settings of their employees are
properly maintained. If any employee is exposed to hazardous chemical then this become the
responsibility of the management to ensure with proper equipments and infrastructure that can
support the workers under dangerous situations. Under this legislation, employer can get
penalised if they violate guidelines provided under this law (Park and et.al., 2021). This law has
introduced in order to bring safe working practices. For example factory premises must keep a
fire exist that will allow the staffs or workers to get an exist in the situation of fire. Medical kit
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should also be maintained by the organisation to provide the immediate medical help addressing
the life threatening situations.
Layout of warehouse
Warehouse layout is the physical structure or design which consists of the interior or
exterior part of warehouse. It includes the area that is surrounded with the warehouse building.
The distribution company that manufacture, irrigation of products require various sections in the
warehouse. In the warehouse there is the storage place where all inventories store. Reception
section of the premise involved in communicating with any visitors or the employee associated
with the organisation. Reception is nothing but the help desk. Outside of the warehouse building
there is the space where loading and unloading activities, take places. There is another area
where shipping activities undertake which associate transferring of goods to the markets
(Sudjatmiko and Sahroni, 2018). For designing warehouse it is very important to go planning for
space optimization. Production activity require more space so it must have given more space.
This is a standard layout which will be available for all the standard requirements. Along with
this design can alter based on specific requirements of organisation.
CONCLUSION
Through this report it can be concluded that in order to find out projected demand it is
vital to carry demand forecasting. It is done through proper planning that company will do to
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Illustration 1: Warehouse Layout
Source: Big Rentz. Inc., 2020

reduce chances for company go out of stock. Optimum inventory level can be determined
through reorder point, safety stock, just in time etc. to maintain stock. Occupational safety and
health legislation, 1970 ensure safe workplace for workforces. Layout of warehouses include
loading and unloading space, storage area, reception etc.
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REFERENCE
Books and Journals
Al-Momani, H. and et.al., 2020. The efficiency of using a tailored inventory management
system in the military aviation industry. Heliyon. 6(7). p.e04424.
Costantino, F. and et.al., 2018. Spare parts management for irregular demand items. Omega. 81.
pp.57-66.
Park, J. and et.al., 2021. Strategies to achieve optimum visual quality for maximum occupant
satisfaction: Field study findings in office buildings. Building and Environment. 195.
p.107458.
Sudjatmiko, B. and Sahroni, T.R., 2018. An investigation of optimum safety stock level for
maintenance, reliability and operation materials based on criticality of material and
equipment. Int J Sup Chain Mgt. 7(2). pp.52-61.
Taleizadeh, A.A. and Moshtagh, M.S., 2019. A consignment stock scheme for closed loop
supply chain with imperfect manufacturing processes, lost sales, and quality dependent
return: Multi Levels Structure. International Journal of Production Economics. 217.
pp.298-316.
Online
Big Rentz. Inc., 2020. Warehouse Layout Tips for Optimization. [Online]. Available through:
<https://www.bigrentz.com/blog/warehouse-layout>
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