Two-Bin Inventory Control

What is a 'Two-Bin Inventory Control'

A Two-bin inventory control is 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.

BREAKING DOWN '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. Periodic Inventory

    A method of inventory valuation for financial reporting purposes ...
  2. Carrying Cost Of Inventory

    This is the cost a business incurs over a certain period of time, ...
  3. Highest In, First Out - HIFO

    In accounting, an inventory distribution method in which the ...
  4. Absolute Frequency

    A statistical term describing the total number of trials or observations ...
  5. Lower of Cost and Market Method

    A requirement of GAAP in the United States that inventory be ...
  6. Ending Inventory

    The value of goods available for sale at the end of the accounting ...
Related Articles
  1. Investing Basics

    How to Analyze a Company's Inventory

    Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory.
  2. Investing

    Days Sales of Inventory

    Days Sales of Inventory, also called Days Inventory Outstanding, is a key financial measurement of a company's performance pertaining to inventory management. In simple terms, it tells how many ...
  3. Economics

    How Does a Perpetual Inventory System Work?

    Perpetual inventory is a system that continually tracks inventory items for quantity and availability.
  4. Economics

    How to Calculate Average Inventory

    Average inventory is the median value of an inventory at a specific time period.
  5. Term

    Understanding First In, First Out (FIFO)

    A company that uses the first in, first out inventory valuation method will sell, use, or dispose of assets that it produced or acquired first.
  6. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  7. Fundamental Analysis

    Financial Statement: Extraordinary Vs. Nonrecurring Items

    When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ...
  8. Stock Analysis

    Pier 1 Getting Customers Back

    Pier 1 is doing a better job managing its inventory and selling products that customers want.
  9. Investing Basics

    How Do Internal Controls Work?

    Essentially, internal controls limit fraud and other illegal activities.
  10. Options & Futures

    Build Your Small Business During Downswings

    Here we offer some cost-saving measures to strengthen your business even when the market is weak.
RELATED FAQS
  1. How is the economic order quantity model used in inventory management?

    Understand what types of costs make up total inventory costs, and learn how the economic order quantity model is used to ... Read Answer >>
  2. Why should investors care about the Days Sales of Inventory (DSI)?

    Learn about days sales of inventory and what it measures; understand why an investor would want to know a company's days ... Read Answer >>
  3. How can a company control its holding costs?

    Learn about the specific costs that go into a company's overall inventory holding costs, and understand how a company can ... Read Answer >>
  4. Why is it sometimes better to use an average inventory figure when calculating the ...

    For a couple of key reasons, average inventory can be a better and more accurate measure when calculating the inventory turnover ... Read Answer >>
  5. What is the formula for calculating inventory turnover?

    Learn about the inventory turnover ratio, how it is calculated and what this efficiency metric tells businesses about their ... Read Answer >>
  6. What are the generally accepted accounting principles for inventory reserves?

    As with most matters related to generally accepted accounting principles (GAAP), accountants assigned with the task of applying ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center