Operations Management-stock control Flashcards
What is stock control?
A process ensuring that appropriate amounts of stock are maintained by a business-to meet customer demand without delay
What are the types of stock?
Raw materials
Work in progress
Finished goods
What are raw materials?
Stock that includes all the raw materials/components that are needed to produce a finished good
What is work in progress stock?
Includes raw materials/components that are partly assembled or used to produce the finished good
What are finished goods?
The completed product that has yet to be delivered to the consumer
What are some benefits of holding stock?
Satisfying demand
Coping with fluctuations in demand
Buffer stock to meet late deliveries
Cost savings due to economies of scale
What are some drawbacks of holding stock?
Storage costs Opportunity costs Depreciation costs Security costs Administrative costs Insurance costs Out of stock costs
What does a stock control chart have on it?
Maximum stock level Minimum stock level Reorder level Buffer stock Lead time
What is maximum stock level?
Max level of stock a business can/wants to hold
Depends o storage, sales, product…
What is minimum stock level?
Min level of product business would want to hold
Assuming its more than 0, its known as buffer stock
Depends on sales, lead time, unknown…
What is reorder level?
Acts as a trigger point-when stock falls to this level, the next supplier order should be placed
What is buffer stock?
Amount of stock held as a contingency in case of unexpected orders
Tries to balance the cost of holding stock with amount that’s ordered
What is lead time?
Amount of time between placing order and receiving the stock
On a stock control graph what does the gradient of the line represent?
The rate of sales
The steeper the gradient the faster the rate of sales
What is the calculation for average level of stock?
Max stock level+min stock level/2
