Minimum stock plays a key role in the inventory management. That is why, entities perodically review its level to match with demand and supply of the raw materials. We have covered Minimum Stock Level in our past, but here we will discuss its advantages.
it helps the entity to keep a lowest amount of raw material inventory,
it helps the entity to keep holding cost of inventory to a minimum level,
it helps the entity in avoiding any loss of orders that can arise due to unavailability of stock in the market,
it helps the entity in keeping its obligation towards supplier very low,
it helps the entity in keeping the liquidity ration in a good balance.