Two-Bin Inventory Control - Definition
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What is Two-Bin Inventory Control?
The two-bin inventory control, often referred to as kanban, is a model or system used in determining when resources or inputs should be restocked or recharged. This system is mostly used in the manufacturing sector. Items in the second bin are used to continue production when the first bin gets depleted. In other words, the first bin is the working bin, and the second serves as a reserve. Managers a record of inventory using bin and store ledger cards. This system is used alongside the just-in-time (JIT) method in production processes.
A Little More on What is Two-Bin Inventory Control
Inadequate inventory at crucial times can lead to losses. On the other hand, excess inventory might lead to damage, theft, spoilage, and even sunk costs (when the price falls due to demand). The two-bin inventory control targets both issues and proposes a way in which manufacturers would have just the right amount of stocks at the right time.
This system is summarized below:
- The first bin is positioned over the second bin
- Each bin have a reorder card attached to their bottom
- Materials are sourced from the bin that is easier to reach first
- When the first bin becomes empty, the second bin comes into play
- The first bin will be restocked using the reorder card at its bottom
- After it is refilled, it will take the initial position of the second bin
- The process repeats itself till production is complete
The two-bin inventory control system is mostly used in small and cheaper production processes, as refilling materials in such operations would be easier, and bulk storage is possible.
Higher production processes, on the other hand, make use of the perpetual inventory system. However, it is possible to apply this method to higher production if properly calculated using historical patterns.
The amount of materials to be kept as reserve in the second bin is calculated using: (Daily Usage Rate x duration of production) + safety stock. The duration of production is widely known as lead time, and it is the amount of time from the beginning to the end of a process.
Academic research for Two-Bin Inventory Control
- Renewaltheoretic analysis of a twobin inventory control policy, Gaver Jr, D. P. (1959). Renewaltheoretic analysis of a twobin inventory control policy. Naval Research Logistics Quarterly, 6(2), 141-163.
- On the Stationary Analysis of Continuous Review (s, S) Inventory Systems with Constant Lead Times, Sahin, I. (1979). On the stationary analysis of continuous review (s, S) inventory systems with constant lead times. Operations Research, 27(4), 717-729.
- Inventory management for power transformer spare parts, Suwanasri, T., Suwanasri, C., Waewkaew, N., & Phadungthin, R. (2011, May). Inventory management for power transformer spare parts. In The 8th Electrical Engineering/Electronics, Computer, Telecommunications and Information Technology (ECTI) Association of Thailand-Conference 2011 (pp. 669-672). IEEE.
- Revenue and production management in a multi-echelon supply chain, Kabirian, A., Sarfaraz, A., & Rajai, M. (2013, December). Revenue and production management in a multi-echelon supply chain. In 2013 Winter Simulations Conference (WSC)(pp. 3330-3339). IEEE.
- Supply chain models and considerations for community-based distribution programs: a program manager's guide, Hasselberg, E., & Byington, J. (2010). Supply chain models and considerations for community-based distribution programs: a program managers guide. Reproductive Health Supplies Coalition, Arlington.