Monitoring the performance of a reorder point system: A control chart approach

In order to ensure that an inventory system is performing correctly, management must continually monitor the system and take corrective action as necessary. Only a few previous articles have suggested techniques for monitoring and diagnosing the performance of a reorder point system. Uses statistical process control charts to monitor the systems performance on an ongoing basis. The proposed system is triggered by unplanned stockouts or by a periodic review of each item’s inventory turnover rate. The system then systematically analyses the stockout and the control charts and identifies the causes, which can be fitness-related and/or operations related. Problems can be quickly diagnosed and corrective action taken so the reorder point system will perform as intended.