Operations- inventory control Flashcards
what is operations
the production of goods and services using raw materials
what would be taken into consideration when choosing a supplier
quality of the raw materials
the price charged
can the quantity required be met
how far away the supplier located
how long delievery takes
the reliability of the supplier
Describe inventory control
ensuring enough inventory is available for production to take place without distrubtion
describe max level
the highest amount of inventory that can be held for the lowest cost
describe min level
the smallest amount of inventory that can be held
- avoids a shortage and production being disturbed
describe reorder level
when an order for raw materials should be placed
describe reorder quantity
the amoutn ordered at reorder level
- should arrive when the min level is reached
describe lead time
the time between goods being ordered and them arriving
describe buffer stock
inventory held for emergencies
- the stock held below min level
describe inventory management systom benefits
avoid inventory deteriorating
ensure inventory is available when needed
avoid production stopping
avoid overstocking
avoid customers not receiving order in time
describe the consequences of holding too little inventory
production may stop
employees paid for doing nothing
custoemrs will receive their orders late
- poor reputation
- lose custoemrs
-lose profit/sales
describe the conseuqneces of holding too much inventory
increased costs
- security
- electricity
- storage
money tied up in inventory
increased chance of theft
increased chance of deterioration
fashions may change and you will be left with unsellable inventory
describe just in time inventory control
when raw materials are ordered just in time for them to be used in production
production does not start until an order has been placed by a customer
describe the adv of just in time inventory contorl
money si not tied up in inventory
reduced wastage
less chance of being left with unsellable inventory
improved cash flow
less storage costs
most up to date inventory
describe the dis of just in time inventory control
high reliance on supplier
little time for quality checks
transport problems
no economies of scale
lack of supplies means no production
increase trasnport costs
describe computerised inventory control ( EPOS)
EPOS is used to contorl inventory electronically
- inventory is scanned when received
- inventory is scanned out when sold
epos can reorder inventory automatically when the reorder level is reached by sending an email
goods can be ordered over the internet
manual inventory check must still be carried out atleast once a year
describe warehousing
where the finished goods are held until they are distributed
describe centralised inventory storage
when inventory is stored in a dedicated central storage area
inventory is then distributed to each branch as required
describe centralised adv
better security with specialist staff- less theft
standardised procedures for issuing inventory
economies of scale are achieved as one large order is placed
can cost less for storage
describe centralised inventory storage dis
cost fo specialist staff
dedicated area generates no income
costly to maintain
time wasted distributing inventory to branches- more chance of damage
describe decentralised inventory storage
when inventory is stored in a room within the retail outlet
describe decentralised inventory storage adv
inventory is available when needed
orders are placed for what is sued
quick turnover- less likely to go out of date
orders reflect local tastes
describe decentralised inventory storage dis
spack taken up in each branch
increased chance of theft due to less security
no economies of scale are achieved
all branches will have different procedures for ordering and storing inventory
security is mroe difficult and staff are not specialised
