Procurement Flashcards
Just in time
links orders from suppliers directly with production needs
When is JIT needed
when product is perishable so production needs to go on immediately
Pros of JIT
no need for warehouse cost
more profit
Cons of JIT
cost of frequent deliveries
Lost purchasing economies of scale
Economies of scale
cost advantages that a business can exploit by expanding their scale of production
Just in case
business orders more raw materials just in case they are required (buffer stock)
Push factors
produce as many items and supply as much as possible
Pull factors
producing x amount of products specifically for retailer
pros of JIC
satisfies customers
purchase economies of scale
cons of JIC
cost of buffer stock = cost of warehouse stock
potential for waste
potential for perishable stock
