Operations - Inventory Management

Question 1

• Describe ‘Maximum Inventory Level’
• Describe ‘Minimum Inventory Level’

Answer 1

• Largest amount of stock stored on site
• Smallest amount of stock stored on site

Question 2

• Describe ‘Re-order level’
• Describe ‘Re-order Quantity’

Answer 2

• Amount of stock ordered (takes 2 weeks lead time to arrive)
• Amount of stock ordered to restore inventory to maximum point

Question 3

• Describe ‘Lead time’
• Describe ‘Buffer stock’

Answer 3

• Amount of time between an order for stock being placed and the order being delivered
• Backup stock

Question 4

• Draw and Label the Inventory Control Diagram
• What is the role of the diagram?

Answer 4

See summary sheet
* Helps businesses determine how much stock to order and how much to keep avaliable