2.3.2 Working with suppliers

Question 1

What does logistics mean?

Answer 1

Transporting goods to customers

Question 2

What does stock mean?

Answer 2

Raw materials, work-in-progress, finished goods

Question 3

What does stock consist of?

Answer 3

• raw materials waiting to be used in production
• work in progress
• finished stock waiting to be delivered

Question 4

What are the negative consequences of holding too much stock?

Answer 4

• high storage costs, which may mean the business has to raise its prices
• increased waste, if the products are
  perishable, eg fruit and vegetables
• reduced income, if the business needs to sell off excess stock at a reduced price

Question 5

How do business manage stock?

Answer 5

● interpretation of bar gate stock graphs
● the use of just in time (JIT) stock control