Inventory management

Question 1

Purpose of a stock management system

Answer 1

• ensure stock is available at any one time
• avoid delays to customer orders
• ensure over stocking does not take place

Question 2

Meaning of over stocking

Answer 2

• too much stock can result in high storage costs
• increased security and insurance costs
• products left unsold that may be spoiled

Question 3

What does under stocking mean

Answer 3

• business has nothing to sell
• no bulk buying discounts if u buy in small quantities
• customers go elsewhere
  -poor reputation
• loss of sales results in loss of profit

Question 4

Features of a stock management system

Answer 4

• Maximum stock level - highest amount of stock that can be stored at one time.
• minimum stock level - the lowest amount of stock that should be stored at one time.
• re-order level - the quantity at which more stock is ordered
• lead time - the time that passes between ordering stock and it arriving

Question 5

Advantages and disadvantages of JIT

Answer 5

• A less storage and warehouse space is required
• A changes in fashion trends will have a reduced impact
• D discounts for bulk buying might be lost
• delivery costs might be higher due to more jounry’s

Question 6

Advantages and disadvantages of computerised stock control

Answer 6

• A print stock lists showing the balance of each item
• A record details of suppliers and their delivery times
• D there are high installation costs for the machinery required
• D it is costly for a company to train staff, whether on or off the job

Question 7

What should be Storage condition

Answer 7

• warehouse to be locked and supervised
• appropriate space given to bulky items
• all shelves labelled appropriately
• well lit, dry and well ventilated

Question 8

What is centralised storage

Answer 8

Involves storing in one central location in a large purpose built warehouse

Question 9

A& D of centralised storage

Answer 9

• Amaintaining securityi is easier in one location rather than several
• items can be found quicker as they are in one place
• if large amounts are held there is an increased likelihood of wastage
• if there’s fire/floods all goods could be damaged

Question 10

Meaning of decentralised

Answer 10

Involves storing inventory in locations close to where they are needed for production or sales