2.1 Stock Control Management- Operations Flashcards
Maximum (economic) Stock Level
This is the highest level of stock that the business can afford to hold. Taking into account the problems of holding too much stock.
Minimum Stock Level
The lowest level of stock the business would ever want to have in order to guarantee continuity of production.
Re-Order Level
The stock level at which new stock should be. This is calculated on daily usage, minimum stock levels held pus delivery time.
Re-Order Quantity
This is the amount of stock needed to return to the Maximum Stock level from the minimum stock level.
‘Just-in-time’ stock control
This is when stock is ordered in only when it is needed. An example of this is a car garage. They only order in parts of cars when they are needed.
Advantages of centralised stock control
It is easier to secure the stock against damage or theft as it will be easier to monitor receipts and issues.
Area would be supervised by specialty staff who would be less likely to make mistakes in ordering and issuing stock.
Bulk ordering may allow the business to negotiate a more favourable price.
Disadvantages of centralised stock control
Time may be wasted by staff repeatedly having to travel to and from the stock storage area.
Specialist staff may require training which is costly.
Advantages of de-centralised storage control
Stock is more immediately ‘on hand’ which is more efficient use of the time.
Orders of stock will reflect actual usage in each department.
Quicker turnover of smaller amounts of stock means that the chance of damage or deterioration is smaller.
Disadvantages of de-centralised stock control
With less rigid control of stock, the business is vulnerable to theft of stock- often small amounts of time.
Stock waiting to go in to production or on the shelves may clutter up the factory or shop floor.
Advantages of Road transport
Allows the delivery of materials, components and finished goods to remote locations.
Distribution is not dependent on a particular timetable as road deliveries can be made any day at any time.
Disadvantages of Road transport
The greater the distance the greater the chance of delay due to road congestion or adverse weather conditions.
Government regulations place a limit on driving time in any 24 hour period, so there mat be time lost while drivers have a rest.
Advantages of Rail transport
Channel tunnel means that products can be transported to man European destinations.
It can be faster than road transport and can shift large volumes products at one time.
Disadvantages of rail transport
It is limited to where rail lines go to, so it had to be combined with road travel with containers being transferred between trains and lorries, resulting in possible delays.
Advantages of Sea transport
Cost effective ways of getting high bulk, low value goods to and from overseas markets.
Disadvantages of sea transport
Transportation is slow over long distances, although perishable goods can be refrigerated to maintain their quality. Need to plan ahead to make sure customers have their products when they need them.
