Inventory Management Control System Flashcards
What is the maximum inventory level?
This is the most amount of inventory that should be held.
What is the minimum inventory level?
This is the least amount of inventory that should be held.
What is the re-order level?
The level at which inventory is re-ordered. Computerised inventory systems link to EPOS and automatically re-order goods.
What is the re-order quantity?
This is the amount that is ordered to return to the maximum level.
What is lead time?
This is the time taken between an order being placed and inventory arriving.
What is buffer inventory?
This is the extra inventory below the agreed minimum to be used in emergencies.
What is a justification of maximum inventory level?
Setting this level avoids consequences of overstocking.
What is a justification of minimum inventory level?
Setting this level avoids the consequences of understocking.
What is a justification of re-order level?
This avoids running out of inventory.
What is a justification of re-order quantity?
This ensures the quantity ordered is not too much or too little.
What is a justification of lead time?
As short a lead time as possible allows the business to react to rush orders.
What is a justification of buffer inventory?
This ensures that production doesn’t stop and sales continue to be made.
