Operations - Inventory Management

Question 1

Draw an inventory control diagram

Answer 1

1 - Axis
1 - Labels
1 - S

Question 2

What is computerised stock control ?

Answer 2

in a Large business, each product will be given a Barcode. when the barcode is scanned at the till (electronic point of sale) this will update the stock records

Question 3

What are disadvantages of computerised stock control ?

Answer 3

• expensive to install and maintain
• if the system breaks down it can hold up orders

Question 4

What is the difference between manual and computerised stock control ?

Answer 4

Manual stock control takes place in a SMALL business by HAND using a ‘bin card’ (paper) whereas computerised stock control takes place in a LARGE business using EPOS

Question 5

What are advantages of computerised inventory control ?

Answer 5

• An automatic re-order level can be set so that the business doesn’t run out of stock
• reduces the need for stock-taking
• will avoid overstocking and understocking
• can be linked through to tills by epos which can automatically update stock levels
• can highlight best sellers/ slow sellers which will help managers make decisions on promotion

Question 6

What are some problems with understocking ?

Answer 6

• production can stop if a business runs out of supplies, which can lead to poor customer satisfaction
• miss out of bulk buying discounts
• unexpected customers orders cannot be met
• increase in delivery and admin costs because they have to order stock more frequently

Question 7

What are some problems with overstocking ?

Answer 7

• Supplies can go out of date or fashion before they can sell all the stock
• risk of theft: if a business has lots of stock they will need to keep it in a warehouse which may get broken into or staff could steal
• it is expensive to store stock. the business has to pay for security system to keep it safe
• Cash flow problems: if a business buys too much stock they wont have cash available to pay for other expenses