Chapter 39: Stock Control Flashcards
What is stock control?
how much stock you have at any one time and how you keep track of it. It applies to every item you use to produce a product or service.
3 factors that influence stock levels
Demand: sufficent stocks msut be kept to supply demand
Stockpile goods: Stocks are kept and reserved in order to be supplied during a certain time of high demand
The costs of stockholding: if stock is expensive only a small amount will be withheld
What is a buffer stock?
This is an emergancy stock held in case there is a stock shortage, such a sudden change in demand.
3 implications of poor stock control
Storage: stocks of raw materials, compents and finished goods occupy space in buildings, this is expensive.
Unsold stock: if there is an unexpected reduction in demnad the firm may be left with stcok that cannot sell.
Spoilage costs: quality of stocks may deteriorate over time, for example perishable goods
Explain ‘Just-in-time (JIT) management of stock
It is used to manage the stock that is kept in storage. It involves receiving goods from suppliers as and when they are required, rather than carrying a large inventory at once.
3 advantages of JIT
Improves cash flow
The system reduces waste
The costs of stock holding are reduced significantly
3 disadvantages of JIT
A lot of faith is placed in reliability and flexibility of suppliers
Advantages of bulk buying may be lost
Difficult to cope with sharp increases in demand
Explain waste minimisation
An approach that focuses on reducing the amount and toxicity of hazardous waste generated. … Waste minimization techniques focus on preventing waste from ever being created, otherwise known as source reduction, and recycling.
3 ways to reduce watse
accurately estimating demand
sutiable stock rotation method should be adopted
Use technology to their advantge, using computers to manage stock
