What is a 'Two-Bin Inventory Control'

Two-bin inventory control is an inventory control system used to determine when items or materials used in production should be replenished. The two-bin inventory control method is mainly used for small or low-value items. For example, when items in the first bin (working stock) have been depleted, 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 working 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'

The two-bin inventory control system is used for quantity control of material to help minimize costs on the production floor. Small or low-value items are mainly part of a two-bin inventory control system, as opposed to higher value items subject to the perpetual inventory system. Depending on historical patterns of variance in the depletion rate of the working stock (bin no. 1), the amount ordered for the reserve stock (bin no. 2) can be adjusted. The two-bin inventory control system is broadly employed across different industries with manufacturing operations. The system is also effective for hospital inventory control.  

This method is also sometimes referred to as kanban, which is strongly associated with the just-in-time (JIT) method of a manufacturing process.

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