2.4.3 - Stock Control Flashcards
What is stock?
Current asset geld by business to help meet the demand of customers
What is stock used for?
To fill differences between production output and demand
What 3 forms is stock held in?
- work in progress
- raw materials
- finished products
What does the amount of stock held depend upon?
- business’ attitude to risk
- importance of speed as an operational objective
- speed of change within the market
- nature of the product
What is the reorder level?
Level of stock which triggers an order
What is the buffer level of stock?
Stock held by a business to cope with unforseen circumstances
How much buffer stock does a business operating a JIT system have?
Zero
What is a business left with when it reaches its maximum stock level?
Buffer stock
What are reorder quantities?
Point at which an order for new stock is placed
How can the efficiency of reorder quantities be improved?
Automated with a computerised stock control system
What are stock control diagrams?
A management tool used to control and monitor the flow of stock
How can lead time be measured on a stock control diagram?
On the horizontal axis as the distance from reorder level to minimum stock level
What do stock control diagrams show?
The time it takes between placing an order and receiving delivery
What does a greater lead time mean?
Higher minimum stock level
