Two-Bin Inventory Control

AAA

DEFINITION of 'Two-Bin Inventory Control'

An inventory control system used to monitor the quantity of an item left behind. The two-bin inventory control method is mainly used for small or low value items. For example, when items in the first bin have finished, an order is placed to refill or replace these items. The second bin is supposed to have enough items to last until the placed order arrives. The first bin has a minimum of stock and the second bin keeps reserve stock or remaining material. Bin cards and store ledger cards are used to record the inventory.

INVESTOPEDIA EXPLAINS 'Two-Bin Inventory Control'

This system is used for material control, which is basically the control of materials. This is a cost effective method where the goal is to save money and use it to order more materials. It is used to control overstocking and under-stocking issues and keep track of miss-management of material.


This method is also referred to as kanban, in the United States.



RELATED TERMS
  1. Economies Of Scale

    The cost advantage that arises with increased output of a product. ...
  2. Closed Loop MRP

    A system used for production planning and inventory control, ...
  3. Kanban

    A specific type of inventory control system. The kanban system ...
  4. Diseconomies Of Scale

    An economic concept referring to a situation in which economies ...
  5. Unit Cost

    The cost incurred by a company to produce, store and sell one ...
  6. Production Efficiency

    1. An economic level at which the economy can no longer produce ...
Related Articles
  1. Working Capital Works
    Insurance

    Working Capital Works

  2. Measuring Company Efficiency
    Fundamental Analysis

    Measuring Company Efficiency

  3. The Working Capital Position
    Investing Basics

    The Working Capital Position

  4. Inventory Valuation For Investors: FIFO ...
    Fundamental Analysis

    Inventory Valuation For Investors: FIFO ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center