What is the purpose of min/max inventory levels?

• A. Determine menu pricing
• B. Schedule staff shifts
• C. Set lower and upper bounds to trigger orders to ensure stock without overordering
• D. Evaluate supplier performance

Answer: (C)

Setting min/max inventory levels creates a floor and a ceiling for stock. The lower bound tells you when to reorder, and the upper bound tells you how much to reorder to bring stock back up. This approach helps you keep enough items on hand to meet demand without tying up too much capital in excess stock. In practice, you set these values based on past usage, supplier lead times, and the desired service level, often adding safety stock to cover variability. When on-hand drops to the minimum, a replenishment is triggered to raise stock up to the maximum, reducing the risk of stockouts and overstock. Other tasks like pricing, staffing, or supplier evaluation serve different purposes and aren’t about setting reorder thresholds.