Stock Control

Question 1

Lead time def

Answer 1

The difference between the stock being re ordered and it arriving

Question 2

Stocks def

Answer 2

Represent the raw materials, finished goods and work in progress help by a firm to enable production and meet customer demand

Question 3

Reorder level def

Answer 3

The point at which the firm re orders more stock

Question 4

Minimum stock level def

Answer 4

This is the minimum amount of stock a business will hold

Question 5

Buffer stock def

Answer 5

The certain amount of stock that is held in case of unexpected events or orders meaning they can be met without delay

Question 6

Buffer stock advantages

Answer 6

• reduce risks of not being able to meet customer demand - buffer stocks allows firm to meet unexpected changes in demand

Question 7

Buffer stock disadvantages

Answer 7

• business will have to spend excess money on these stocks increasing their average costs
• unlikely stocks will be used, not liquid waste of money

Question 8

Factors influencing how much stock to reorder

Answer 8

• demand
• forecast changes in trends
• consider high performance product lines
• current supply at max capacity

Question 9

Factors determining if a business needs to hold stock

Answer 9

• level of demand
• nature of market
• nature of prodcution process
• amount of capitol available
• perishable item or not

Question 10

Why do businesses hold stock

Answer 10

• satisfy demand
• in case of mistakes
• acts as safety buffer
• avoids problems
• gains from purchasing economies of scale

Question 11

Disadvantages of stock control diagrams

Answer 11

• does business have cash flow to buy this stock
• regular pattern unlikely
• constant usage rate unlikely
• orders may arrive late/ incorrect

Question 12

Waste minimisation def

Answer 12

Is cutting out any process that does not add value to the business in order to minimise inputs

Question 13

Features of waste minimisation

Answer 13

• time wasted by workers who aren’t busy
• workers moving form place to place unnecessarily
• using more raw materials than needed
• machines standing idol

Question 14

Just in time definition

Answer 14

A system where supplied are received as soon as they are needed, therefore there is no need for a business to hold any stock

Question 15

Benefits of just in time

Answer 15

Minimises waste because supplies are received when they are needed, reduces average costs

• cost saving bc business doesn’t have to spend money holding onto stock
• less capital died up in stock, use money for better purpose

Question 16

Drawbacks of just in time

Answer 16

• difficult to incorporate because lots of processes involves
• high costs implement JIT due to huge changes in production
• risk of running out of stock especially if business doesn’t have good relationship with suppliers

Question 17

JIT relies on

Answer 17

• supplier relationships: communication, operation, quality
• relatable workers: authority to alter productions
• suitable equipment - needed to change needs

Question 18

Issues of poor stock control

Answer 18

• unable to meet demand
• cash flow problems: money tied up in stocks
• increased stocks: excess stock and money storing this