BS8- Stock Control

Question 1

What is stock control and how is average stock level calculated?

Answer 1

Stock control is being able to manage the amount of stock company has had given times.
Maximum stock level + minimum stock level / two = average stock level

Question 2

What are the 3 types of stock held?

Answer 2

Raw materials, work in progress and finish goods

Question 3

Define re-order level?

Answer 3

It is the point that the business will reorder stock in order for them to not go under the minimum stock level

Question 4

Define maximum level?

Answer 4

It is the maximum level of stock the business can hold

Question 5

Define lead time

Answer 5

The amount of time from re-ordering stock to it arriving

Question 6

Define minimum stock level

Answer 6

The minimum stock level is the lowest point that the business will it stop get to, it is almost like a safety net

Question 7

Define buffer stock

Answer 7

The buffer stock is in excess of stock. It is that in case the delivery is delayed so the business still has stock

Question 8

What does the economic order quantity try to do?

Answer 8

is the order quantity that minimizes the total holding costs and ordering costs in inventory management.

Question 9

List 3 factors affecting how much stock to re-order

Answer 9

Quantity sold
time in which it took to Sell out
Success of previous order

Question 10

What are the implications for a business running out of stock

Answer 10

Main implication for a business running out of stock is the fact that customers will be unsatisfied and therefore have a bad view of the company. If they didn’t say they were out of stock customers could be waiting a long time for a delivery.

Question 11

What are the benefitted and drawbacks of holding stock

Answer 11

Benefit- they shouldn’t run out of stock so will always be able to supply the customer
Drawback- They have to pay for the storage unit for the stock