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. Production Efficiency

    1. An economic level at which the economy can no longer produce ...
  5. Unit Cost

    The cost incurred by a company to produce, store and sell one ...
  6. Diseconomies Of Scale

    An economic concept referring to a situation in which economies ...
RELATED FAQS
  1. What are some examples of a deferred tax liability?

    In the United States, laws allow companies to maintain two separate sets of books for financial and tax purposes. Because ... Read Full Answer >>
  2. Why is the use of contra accounts so important for maintaining ledgers?

    Contra accounts have been used in financial accounting to verify the balance of another corresponding account since Renaissance ... Read Full Answer >>
  3. What impact did the Sarbanes-Oxley Act have on corporate governance in the United ...

    After a prolonged period of corporate scandals involving large public companies from 2000 to 2002, the Sarbanes-Oxley Act ... Read Full Answer >>
  4. How does private placement affect share price?

    Private placement is a common method of raising business capital through offering equity shares. Private placements can be ... Read Full Answer >>
  5. How is deferred revenue treated under accrual accounting?

    In accrual accounting, deferred revenue, or unearned revenue, represents a liability on the balance sheet recorded on funds ... Read Full Answer >>
  6. What are some of the advantages and disadvantages of absorption costing?

    Companies must choose between using absorption costing or variable costing in their accounting systems. There are advantages ... Read Full Answer >>
Related Articles
  1. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  2. 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.
  3. Investing Basics

    The Working Capital Position

    Learn how to correctly analyze a company's liquidity and beat the average investor.
  4. Fundamental Analysis

    Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.
  5. Investing Basics

    Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.
  6. Investing

    What is Comprehensive Income?

    Comprehensive income is a part of the owners’ equity section of the balance sheet.
  7. Economics

    Explaining Financial Analysis

    Financial analysis is a general term that refers to using financial data to make business and investment decisions.
  8. Economics

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  9. Professionals

    What Does a Chief Operating Officer (COO) Do?

    The Chief Operating Officer (COO) is usually considered the second-in-command at most corporations.
  10. Entrepreneurship

    What is a Business?

    As a general term, business means the commercial activities of an individual or group engaging in some type of financial transaction.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center