5.6 - Production Planning (HL) Flashcards
1
Q
Stock Control Chart
A
- A visual aid to maintaining suitable levels of inventory over a period of time
Predict future stock levels in order to ensure:
- Do not run out of inventory
- Minimize inventory levels
2
Q
Supply Chain
A
- A system of steps that convert raw materials into goods or services and then into the hands of customers
- Production and delivery of goods or service
- Might involve suppliers, producers, wholesalers, retailers and agents, etc…
3
Q
A good supply chain can…
A
- Reduce costs
- Reduce waste
- Reduce delivery time to customers
- Improve quality
4
Q
Inventory
A
When a business holds stock of:
- Raw materials
- Work-in-progress
- Finished goods
5
Q
Just-in-case (JIC)
A
- Stock management strategy whereby firms hold higher levels of stock
- High levels of stock mean that the business can easily deal with unexpected events
6
Q
Just-in-Time (JIT)
A
- Stock control method where inputs arrive just before they are used in the production process
- Finished products are delivered to consumers as soon as they are produced
- No or limited inventory is held
7
Q
Pros of JIC
A
- Less likely to run out of stock
- More potential to bulk buy - higher economies of scale
- Can deal with sudden increases in consumer demand
8
Q
Cons of JIC
A
- Higher storage costs
- Products kept in stock for a long period of time may lose their freshness
- High amounts of cash tied up in stock
9
Q
Pros of JIT
A
- Hold less stock - lower storage costs
- Can respond to the market quickly
- Stock doesn’t become outdated - e.g. food
10
Q
Cons of JIT
A
- Dependent on suppliers
- Higher delivery costs and less bulk buying savings
- Need to purchase and maintain more complex IT systems (predict consumer demand)
- Loss of reputation it unable to meet
11
Q
Maximum Level
A
Level of stock that a business can hold, as limited by space
12
Q
Re-order level
A
Level of stock that triggers a new order
13
Q
Re-order quantity
A
Amount of stock that is ordered
14
Q
Lead Time
A
Time between order and delivery of the order
15
Q
Buffer Stock
A
Minimum stock level held in case of emergencies (e.g. delay in delivery)