Operations Flashcards
4 levels of storage in inventory control diagram
Lead time
Minimum storage
Reorder level
Maximum storage
Advantages of JUST IN TIME JIT
reduces wastage
No money tied up in inventory
Less risk of inventory going out of date
Lower storage costs
Disadvantages of just in time JIT
Increased delivery costs
Increased carbon footprint
Could be delayed with orders from suppliers
Advantages of centralised storage
Improved security
Economies of scale due to bulk buying
More cost effective
Specialised staff
Disadvantage of centralised storage
Time delay
Costs of specialist staff can be costly
Need specialist equipment
One size doesn’t fit all
Advantages of decentralised storage
No delay is always accessible
Departments are more responsive to change in needs
Less money tied in inventory
Disadvantages of decentralised storage
Can only hold small amounts of stock at once
Increased delivery costs
Security might not be as effective
No specialist staff
What is warehousing?
As it is almost impossible to match the output with demand it becomes necessary to share inventory of finshed goods
Advantages of warehousing
Large volume of storage can be held securely
Inventory can be held in appropriate conditions to prolong its life span
Hold inventory to cope with surge in demand or unexpected delays from supplier
Disadvantages of warehousing
Expensive
Large amount of capital held up in inventory
Fire/flood could ruin large volume of inventory
Advantages of labour production?
Customised products
Less investment required
Can respond to change
Disadvantages of labour production?
High wage
Staff need breaks
Human error
Advantages of capital production?
Machine can work 24/7
High output volume
Removes human error
Disadvantages of capital production?
Lower motivation
Production stops if machine breaks
