Question

identify a product you keep on hand at home and do not want to be without. how many days-of-supply do you typically keep? what are the stockout costs? what are the cost of keeping too much?

Answer 1

One of the products that I always keep on hand at home and do not want to be without is Coffee powder.

I usually keep a week’s worth of inventory on hand. There are no particular stockout cost in direct monetary terms. However, without coffee sometimes it feels to focus on my work in the morning. Thus it harms my productivity. In that sense the cost of stockout is a half a day’s worth of work.

In case if I stock too much in hand, the coffee powder gets spoiled if it is kept for too long. That is however a different type of cost. But in all honesty, it takes a considerable amount of time before the coffee is spoilt. Thus the cost of overstocking is difficult to estimate.