What is par stock and how is it used in daily operations?

• A. The minimum quantity of stock to keep on hand to meet demand; used to trigger purchase orders
• B. The maximum quantity allowed in storage; used to cap orders
• C. The average daily usage; used to forecast sales
• D. The safety stock level only for emergencies; used to override orders

Answer: (A)

Par stock is the minimum amount of an item you keep on hand to meet expected demand. It serves as the trigger for replenishment: when on-hand inventory reaches that minimum, you place a purchase order to bring stock back up to the target level. In daily operations, you set par levels for each item based on how quickly it’s used, how long it takes suppliers to deliver, and the item’s shelf life. This helps prevent stockouts during busy periods and makes ordering routine. For example, if a sauce is used steadily and deliveries arrive in a couple of days, you might set a par that covers several days of usage so you don’t run out while waiting for the next delivery. Par stock is different from the maximum stock limit, which is simply the cap on storage, and from average daily usage, which is a forecast rather than a stocking rule; it also isn’t only a safety buffer for emergencies.