S, S-1 Inventory Policy | Concept

Ole Ersoy
Sep - 20  -  1 min

An S, S-1 Inventory Policy means that as soon as we sell one part we place an order for another.

This policy is common for for:

  • long lead time
  • capital intensive
  • low demand

service parts in industries such as aerospace.

Dynamics

We have 10 service parts in stock. We sell one and immediately place an order for another.

Now there's 9 in stock and 1 in flight.

We sell another and immediately place an order. We now have 8 in stock and 2 in flight.

Sell another and immediately place an order. We now have 7 in stock and 3 in flight.

As we can see we what we have on hand and what we have in flight will always equal 10.