2.4.3 Stock control Flashcards
1
Q
What is stock/inventory?
1
A
- Materials, partially made products and finished goods owned by firm, that haven’t been sold
2
Q
What are the key features of stock control diagram?
4
A
- Max stock level
- Buffer stock lvl
- Re-order lvl
- Lead time (delivery time)
3
Q
What are the pros of just in case?
3
A
- Supplies fail to arrive on time (production continues)
- Sudden ^demand
- Accept rush orders
4
Q
What do any vertical gaps or changes resemble on stock control diagram?
1
A
- Quantity of stock
5
Q
What do any horizontal distances resemble on stock control diagram?
1
A
- Times
6
Q
What problems can result from JIC?
5
A
- Opportunity cost
- Cash flow problems
- ^Storage costs
- ^Wastage
- Risk of natural disasters
7
Q
How can too much stock result in opportunity costs?
1
A
- Ties up capital, stock prevents money used in other ways
8
Q
How can too much stock result in cash flow problems?
1
A
- Stock = not yet converted into cash, firm may run short of actual cash
9
Q
How can too much stock result in wastage?
1
A
- Shifting consumer demand (obsolete)
10
Q
What problem may occur from delays in production (JIT)?
1
A
- No mats to process = machinery/workers left idle, inefficient
11
Q
What is the main aim of JIT stock management?
1
A
- Completely eliminate buffer stock
12
Q
What are the benefits of JIT stock control?
3
A
- > Wastage
- Maintain healthy cash flow
- > Fixed costs, >inventory
13
Q
What are the drawbacks of JIT stock control?
4
A
- > Customer satisfaction
- > Deliveries = >bulk buying discounts
- Supplier must reliable, miss deliveries = no stock
- Frequent deliveries = ^congestion/pollution
14
Q
What does JIT stock control increase the importance of?
1
A
- Relationship between business and supplier
15
Q
How does JIT stock control minimise waste?
3
A
- Less stock
- Cash not tied in stock
- Remove buffer stock, see problems, iron out
