Considerations On Stock Optimization

In order to carry out its activity in optimum conditions and achieve its goal, either to develop a product, to do a job or perform a service, any entity must maintain a balanced level of stocks of raw materials and materials. However, very careful attention should be paid to the stocks’ level, since this level should not record values too high, or too low. These values lead to overstocking or stockouts situations, which should be avoided. The blockage of liquidity and the deterioration of raw materials and materials stored over a long period of time are the main consequences of overstocking, and, among the consequences of the stockout we can list: discontinuation of business, which may mean diminishing profits but also loss of customers’ confidence through termination of contracts. In order to achieve the optimal stock level, we recommend an efficient administration of this activity, which implies the implementation of a well-designed information system that provides information at all times to the management and the supply department and, at the same time, effective management, since it has consequences on the company’s profitability and requires good communication with both the internal and external environment. We aim to focus in this study on the factors influencing the achievement and preservation of an optimal stock level, the importance of safety stock, the role of stock administration and inventory management within an entity.