purchasing

Question 1

What is the definition of effective stock management?

Answer 1

Ensuring a smooth flow of goods from production to the final consumer by managing raw materials, work in progress, and finished goods

Question 2

What are key aspects of effective stock management?

Answer 2

1. Stock availability for manufacturing processes. 2. Quick movement of part-finished goods.
2. Finished goods ready for timely delivery.

Question 3

What is ‘Re-order Level’ in stock control?

Answer 3

The stock level at which a new order is placed.

Question 4

Define ‘Lead Time’ in stock control

Answer 4

The time between placing an order and receiving the delivery.

Question 5

What is ‘Buffer Stock’?

Answer 5

Stock kept between the minimum holding level and zero to cover for late deliveries or extra orders.

Question 6

What is the main concept behind Just-in-Time (JIT) manufacturing?

Answer 6

Minimizing the costs of holding stock by receiving materials only when they are needed for production.

Question 7

List the key requirements for an effective JIT system.

Answer 7

1. Efficient ordering system.
2. Reliable suppliers for timely deliveries.
3. Well-trained and flexible workforce.

Question 8

What are potential problems of the JIT system?

Answer 8

• High ordering and admin costs
• loss of bulk-buying advantages
• risks if suppliers fail to deliver on time.

Question 8

What are two crucial systems for effective stock management?

Answer 8

1. Effective relationships with suppliers and customers.
2. Strong internal relationships in the production process.

Question 9

How does computerised stock control improve stock management?

Answer 9

By automating stock checks and reordering, reducing human error, and updating stock levels in real-time.

Question 10

Name an advantage of effective stock management related to finance

Answer 10

Reduction in working capital, freeing up money for investment

Question 11

How does effective stock management benefit customer relationships?

Answer 11

It helps maintain regular, reliable orders and strengthens trust with customers.

Question 12

What is a major disadvantage of holding too much stock?

Answer 12

• High costs in storage, handling
• insurance
• potential obsolescence or damage.

Question 13

What are the consequences of not having enough stock?

Answer 13

• Production delays
• potential worker layoffs
• damaged reputation due to late or cancelled orders.

Question 14

What is ‘Stock Rotation’ and why is it beneficial?

Answer 14

Using older stock before newer stock to reduce wastage and ensure stock is used shortly after delivery.