Fundamentals of Business

Cycle count

Is an inventory management procedure where a small subset of inventory is counted on any given day. Cycle counts contrast with traditional physical inventory in that physical inventory stops operation at a facility and all items are counted, audited, and recounted at one time. Cycle counts are less disruptive to daily operations, provide an ongoing measure of inventory accuracy and procedure execution, and can be tailored to focus on items with higher value or higher movement.

Physical inventory
Is a process where a business physically counts its entire inventory. A physical inventory may be mandated by financial accounting rules or the tax regulations to place an accurate value on the inventory, or the business may need to count inventory so component parts or raw materials can be restocked. Businesses may use several different tactics to minimize the disruption caused by physical inventory.

√ Inventory services provide labour and automation to quickly count inventory and minimize shutdown time.
√ Inventory control system software can speed the physical inventory process.
√ A perpetual inventory system tracks the receipt and use of inventory, and calculates the quantity on hand. In business and accounting/accountancy, perpetual inventory or continuous inventory describe systems of inventory is which the inventory as recorded or displayed in the firm or organization's information system is updated on a continuous basis with real inventory in stock. In this case, book inventory would be the same as, or almost exactly the same as, the real inventory.
√ Cycle counting, an alternative to physical inventory, may be less disruptive.

Pull inventory
Philosophy of inventory where warehouses "pull" replenishment inventories according to order sizes based on specific needs of each warehouse.

Push inventory
Philosophy of inventory where supply (inventory) is allocated from the production site to the warehouses based on the forecast for each warehouse. This method can best be applied when production quantities exceed the short term quantities of orders. These quantities must be allocated to the stocking points preferably in some way that makes economic sense.

Service level
rvice is the complement of the probability of a stock out.
For example,
If the probability of stock out is 5%, then the service level is 95%.
Mathematically,
Service level = 1 - Pr(stock outs) where Pr stand for Probabilit Probability
Service level is used in Supply Chain Management and in inventory management to measure the performance of an inventory systems.