Proper stock management is to know the quantities of product that are needed and when needed. Although the costs that are most committed to logistics management are:
-Product acquisition costs
The stock of security will be the “mattress” of merchandise that serves to cope with unforeseen circumstances.
Characteristics of the safety stock
-Know when to place an order. For the reorder point calculation it will be necessary to take into account what is in transit and the expected demand for that merchandise that has to be covered.
-Will be used when the actual demand is higher than expected.
-Helps the logistic project manager in the search for results that maintain customer satisfaction.
In my opinion, a bad decision in terms of inventory management can generate many costs whether it is deviated by excess or deviating by default.