Inventory management

Question 1

What is centralised storage?

Answer 1

One central location, in a large, purpose-built warehouse

Question 2

What is decentralised storage?

Answer 2

Storing inventory in smaller warehouses or storerooms

Question 3

List two advantages of centralised storage.

Answer 3

• Specialised staff employed to maintain inventory
• Can store a massive amount of stock

Question 4

List two disadvantages of centralised storage.

Answer 4

• Inventory has to be delivered to each department, causing delays
• Increased costs due to specialist equipment

Question 5

List two advantages of decentralised storage.

Answer 5

• Inventory is always close at hand, therefore no delay
• Smaller warehouses are more responsive to local needs

Question 6

List two disadvantages of decentralised storage.

Answer 6

• Increased delivery costs due to low amounts of inventory being delivered
• Security may not be as effective

Question 7

Fill in the blank: Centralised storage may be _______ to store inventory in one warehouse than many smaller storerooms.

Answer 7

[cheaper]

Question 8

True or False: Centralised storage is in decline due to more efficient methods.

Answer 8

True

Question 9

What is an example of a centralised storage location?

Answer 9

Dunfermline Fulfillment Center

Question 10

What is a key factor to consider when deciding on a method of production?

Answer 10

Costs and benefits

Question 11

What is a potential drawback of having inventory in a centralised storage system?

Answer 11

Delays in inventory delivery to departments

Question 12

Fill in the blank: Decentralised storage allows for inventory usage to reflect _______.

Answer 12

[production]

Question 13

List the advantages of centralised warehousing.

Answer 13

• Same procedures for issuing inventory used across the organisation
• Often located close to infrastructure

Question 14

What is a disadvantage of having no specialist staff in decentralised storage?

Answer 14

Inconsistency across the organisation

Question 15

List two reasons why centralised storage can reduce costs.

Answer 15

• Suppliers are delivering to one location, reducing delivery charges
• Economies of scale gained due to ordering larger quantities

Question 16

What is one disadvantage of decentralised storage regarding inventory management?

Answer 16

No specialist staff dealing with stock

Question 17

Fill in the blank: Centralised storage can lead to an increase in _______ due to storing large amounts.

Answer 17

[wastage]

Question 18

What is a common characteristic of decentralised storage?

Answer 18

Each department is responsible for ordering and storing their own stock

Question 19

What type of production does the term ‘capital-intensive’ refer to?

Answer 19

Production methods that rely heavily on machinery and equipment