Inventory Control

Question 1

What factors influence the maximum stock level a business can hold?

Answer 1

The maximum stock level is constrained by space available, money and the level of demand.

Question 2

What factors influence the level at which the buffer stock is set?

Answer 2

The buffer stock level is influenced by reliability of suppliers or the reliability of the production process.

Also the level of demand - anticipating high demand the buffer will go up

Question 3

How can a business improve operational performance?

Answer 3

• Improve speed of response
• Improve dependability
• Become more flexible

Question 4

What is mass customisation?

Answer 4

Mass customisation is the term for producing on a large scale while still enabling individual customer preferences to be met

Question 5

What is an inventory?

Answer 5

An inventory refers to the stock a business holds. These include the raw materials and other items necessary for production to take place. They also include finished products that have not yet been sold

Question 6

What are the influences on the amount of inventory held?

Answer 6

Managing inventory held is important for these reasons:
• Holding inventory uses up resources
• Holding inventory has an opportunity cost
• Inventory may go out of date and become worthless if held for too long

Question 7

What are the key elements of an inventory control chart?

Answer 7

• The buffer inventory
• The lead time
• The re-order level
• Re-order quantities

Question 8

When problems could arise with inventory control?

Answer 8

• Supplies are delayed and do not arrive on time
• The usage rate is faster than usual
• There is failure to reorder inventory

Question 9

Factors influencing stock levels

Answer 9

Demand

Stockpile Goods

The cost of stock holding

The amount of working capital available

The type of stock

Lead time

External factors