3.3.2

Question 1

stock

Answer 1

includes raw materials, work in progress or finished goods

Question 2

what are the benefits of holding stock?

Answer 2

-meeting customer needs
-ability to react to changes in demand
-shorter waiting time
-customer satisfaction
-good reputation

Question 3

what are the problems of having too much stock?

Answer 3

-higher insurance costs
-shrinkage (thefts are less noticeable)
-obsolescence (stock may go out of date)
-storage costs

Question 4

what are the methods of stock control?

Answer 4

-just in time
-just in case

Question 5

just in time

Answer 5

stock arrives just in time to be sold

Question 6

just in case

Answer 6

holds stock just in case there is a delay from suppliers or a sudden unexpected decrease in demand

Question 7

what are the benefits of just in case?

Answer 7

-can meet sudden increase in demand as has spare stock
-lower risk if there are problems with suppliers
-buy bigger quantities and may get price reductions (bulk discount)

Question 8

what are the drawbacks of just in case?

Answer 8

-holds stock that may go out of date
-higher stock holding costs

Question 9

what might a supply chain that a business uses be?

Answer 9

-general items used to keep the business going e.g. telephone
-materials used in the production process
-major purchases such a machinery

Question 10

what are the factors affecting the choice of supplier?

Answer 10

-cost
-range of products
-flexibility of supplier
-quality
-speed of delivery
-reliability
-reputation
-payment terms
-contract terms

Question 11

what is the definition of a supply chain?

Answer 11

refers to all the businesses, people and activities that take part in the production process from the start until it gets to the customer

Question 12

what is the definition of procurement?

Answer 12

involves selecting suppliers, establishing the terms of payment and negotiating the contract

Question 13

what’s the role of procurement?

Answer 13

1. identify goods and services to buy
2. choosing suppliers
3. ordering goods and services
4. receiving deliveries from suppliers

Question 14

what is the definition of logistics?

Answer 14

movement of goods, services, money and information throughout the production process

Question 15

what are the effects of trade-offs in the supply chain?

Answer 15

-better quality is likely to cost more, it might save money in the long run if customers are satisfied
-faster supplies or reliable supplies are likely to be more expensive
-more frequent supplies may also cost more