Safety Stock Management Regulations - Ensuring Optimal Inventory Control

Safety Stock Management Regulations\n\n1. Purpose\nTo establish safety stock, optimize inventory turnover period, and reduce inventory to the minimum level.\n\n2. Applicability\nApplicable to the raw material and finished goods warehouses of the company.\n\n3. Responsibilities\n3.1 The Sales Department is responsible for determining the safety stock standards based on product sales conditions.\n3.2 Procurement is responsible for determining the inventory standards for raw materials based on finished goods inventory and the maximum production capacity of the Production Department.\n3.3 The Warehouse is responsible for the management of inventory items, ensuring first-in, first-out (FIFO), and guaranteeing the quality of inventory products.\n\n4. Safety Stock Control\n4.1 Period: In January of each year, adjust the minimum and maximum inventory levels of raw materials and finished goods based on the actual sales conditions and production capacity from October to December of the previous year. In April of each year, adjust the minimum and maximum inventory levels of raw materials and finished goods based on the actual sales conditions and production capacity from January to March of the current year. In July of each year, adjust the minimum and maximum inventory levels of raw materials and finished goods based on the actual sales conditions and production capacity from April to June of the current year. In October of each year, adjust the minimum and maximum inventory levels of raw materials and finished goods based on the actual sales conditions and production capacity from July to September of the current year.\n4.2 In case of significant changes in sales conditions, trial production of new products, or elimination of old products, temporary safety stock shall be established.\n4.3 Method for determining safety stock:\nMinimum inventory level = Average quarterly sales quantity ￗ 1.2 safety factor\nMaximum inventory level = Minimum inventory level (based on A, B, C categories) ￗ 1.5-2.5\nNote: \nCategory A (ￗ1.5): Sufficient raw materials, short production cycle, convenient operation, low complexity factor, high demand.\nCategory B (ￗ2): Basic availability of raw materials, average production cycle, average operation, medium complexity factor, moderate demand.\nCategory C (ￗ2.5): Raw material shortage, long production cycle, difficult operation, high complexity factor, low demand.\n\n5. Relevant Records\nQR8.5.4-01 Safety Stock of Raw Materials\nQR8.5.4-07 Safety Stock of Finished Goods.