One bin inventory

One bin inventory control system

A one-bin inventory system is a simple inventory control system which depends on replenishing supply at fixed time intervals and not at a minimum stock level or a Kanban signal. These time intervals must be set in accordance to bin size, demand and lead time time for the bin to be replenished up to its maximum limit no matter the rate of consumption. The bin is drawn down of material or product and when the time interval between replenishments has passed it is replenished by the supply source up to its maximum capacity.

Examples of Uses for one bin inventory systems

The one bin inventory control system is essentially a time interval management model. The one bin inventory system is useful when demand is predictable, stable, and the process does not require a substantial amount of Safety stock, this is contrast to the two-bin inventory system. The supply of the component or raw material is usually quick, dependable, multiple supply sources and has a long shelf life or does not go off easily.

Some examples of this system are listed below:

– Supply of Sand to a concrete plant; sand has a long shelf life, can be usually sourced from different suppliers (depending on geographic location), is usually used in most concrete batch mixes and can be used constantly if the plant is supplying a large project.

– Supply of Milk to a dairy processing plant; although it may not have a long shelf life, Milk usually has a quite a stable demand pattern in most developed countries and is a household staple, it can be sourced from many suppliers and the processing plants are usually close to major dairy farming areas. It is usually stored in food grade stainless steel tanks or silos and drawn down at a constant rate and then replenished until full.

– Supply of Ink to a newspaper printing press; daily newspaper presses print one or two editions of the daily paper every day providing a stable demand for ink, which can be sourced quickly and efficiently in most developed economies and has up to a year or more shelf life.

These are only some examples of where the use of a one bin inventory system is appropriate and can be replenished depending only on time intervals without consideration to minimum stock triggers, order levels, or much concern for price due to stable demand and prices being negotiated in a supply contract upfront or with a pricing formula that may take into account market variables such as the inflation rate or a commodity price set on the open market in many cases.