Lecture 4- Inventory Management

Question 1

What is inflation?

Answer 1

Inflation is where financial targets and budgets become obsolete. Physical measures assume greater importance (not just about accounting numbers).There was a period of high inflation in the 70’s and 80’s in the UK.

Question 2

What are product cost systems?

Answer 2

Direct Labour becomes lower portion of total cost.
Overheads become more significant.
Fixed overheads become a larger percentage of overhead costs.

Question 3

What is the Just-In-Time method?

Answer 3

Just-In-Time is the method where you hold very little stock at any given time, only buy what inventory that you need as demand can change.

Question 4

When was the Just-In-Time method developed?

Answer 4

Developed in Japanese firms in 1980s and 1990s.

Question 5

What is Just-In-Time about producing?

Answer 5

• The required items
• At the required quality
• In the required quantities
• At the precise time scale required

Question 6

What are the advantages of just-in-time?

Answer 6

• Reduction in inventory
• Improved quality
• Lower production costs
• Increased productivity
• Greater Flexability

Question 7

What are the disadvantages of just-in-time?

Answer 7

• Delays (can cause big issues)
• Issues with suppliers
• Seasonal changes can be difficult to accommodate
• Large product range difficult to manage
• Too focused on inventory

Question 8

What is Just-In-Time being replaced with?

Answer 8

Being replaced by Six Sigma. ‘Lean’ manufacturing and practices becoming more popular. Less focus of inventory, more focus on quality.

Question 9

Who did the Japanese and some Europeans pay more attention to?

Answer 9

• People
• Process
• Customers
• Quality

Question 10

What are the basic features of Lean Manufacturing?

Answer 10

It is an approach designed to eliminate waste and maximize customer value.