Inventory management

Question 1

Inventory (stock)

Answer 1

materials and goods required to allow for the production and supply of products to customers

Question 2

Economic order quantity

Answer 2

the optimum or least-cost quantity of stock to reorder taking into account delivery time and stock holding costs

Question 3

Buffer inventories

Answer 3

the minimum inventory level that should be held to ensure that production could still take place should there be a delay in delivery or should production rates increase

Question 4

Re-order quantity

Answer 4

the number of units ordered each time

Question 5

Lead time

Answer 5

the normal time taken between ordering new stocks and their delivery

Question 6

Just-in-time

Answer 6

this inventory-control method aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order