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Danger Level in Inventory Management

Danger level in inventory management is very important level of inventory. It means that quantity at which we stop to issue the stock for general production. Stock is issued on special order of production officer. Sometime, we have to send products to the buyer on the specific date. At that time, we can use the quantity which is in the danger level.


We can compare danger level of inventory with the reserve petrol in bike. When there will be the petrol in reserve, you have to buy the petrol, if you want to drive bike. Like this, you have to stop of issue the stock at this level.

We can also compare danger level of inventory with danger level of hemoglobin, danger level of blood pressure and danger level of sugar in blood. In human body, we will need hemoglobin 111 to  182 gram per litre blood . If level of hemoglobin is less than this, a person can not give blood donation. Because it may be risky for his life.

We can also compare danger level of inventory with danger level of  blood pressure. Blood pressure less than < 90 or >180 is dangerous. So, when doctor see this level, he will be alert and start to treat  immediately. So, inventory manager will also get signal of danger when he will see the quantity of stock under danger level which he calculated with following formula.

Formula to Calculate Danger Level 


= Average Consumption X Max. Re-order Period for Emergency Purchase 

What should do when stock will reach at danger level?


1. Purchase officer should contact to other supplier for supplying inventory immediately.

2. Declare the time as emergency and manager can take some goods from other plant or branch in the time of emergency.

Related Resource :


Minimum Level of Inventory
Reorder Level of Inventory
Maximum Level of Inventory 

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Accounting Education: Danger Level in Inventory Management
Danger Level in Inventory Management
Accounting Education
http://www.svtuition.org/2012/09/danger-level-in-inventory-management.html
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