2.4.3 Inventory Control Flashcards
what is inventory/stock
the store of raw materials, work-in-progress or finished products
most businesses want to ____________ stock levels to keep _____ low
minimise, costs
for your exam you must be able to interpret a stock control diagram
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what is buffer stock
- this is a quantity of goods/raw materials kept in case of shortages
- it is the minimum level of stock ‘just in case’
what is lead time
this is the time between ordering stock from suppliers and it arriving
what is the re-order level
this is the level of stock that indicates to the business that they need to order more stock from suppliers
what is the re-order quantity
- this is the amount of stock that the suppliers deliver at once
stock control diagrams can be used to _______ and ________ stock over time
analyse, control
why is it beneficial to hold buffer stocks
+ creates stability in supply, can respond to demand surges and maintain customers
+ this builds brand loyalty
+ allows businesses to buy in bulk
what are the drawbacks of holding buffer stock
- costs of holding stock, management, storage ?
- opportunity cost, the money tied up in buffer stocks could be used elsewhere in the business
- risk of obsolescence, stock may be damaged/perish or demand may fall
what are stock-in costs
costs of holding stock
what are stock-out costs
the costs associated with running out of costs
what are the implications of poor stock control
- high stock-in costs (costs from holding too much stock)
- high stock-out costs (costs from running out of stock)
- if a business is a supplier they may disrupt the supply chain and lose buyers
- customers may get impatient waiting for stock and move to a competitor
what is lean production
production focused on waste minimisation
one method of lean production is just-in-time management, explain it.
- little stock is stored, raw materials are delivered at the moment they need to be used
