Stock Control π Flashcards
What is buffer stock?
Stock wich is held In case there is an unforeseen rise in demand or problem with supply
Why do we have buffer stock ?
To ensure production is not effected and customer needs are met
What products would not be used within buffer stock
Perishable goods - wastage - not good for capacity utilisation
Technology - goods may become obsolete
What are the advantages of having buffer stock ?
Business can meet sudden spikes in demand - or nonstandard orders
Suppliers in ability to provide will not effect business production or ability to provide products into the market
What are buffer stock disadvantages?
Cost of storage increased
More working capita tied to stock- more risk ofLosses and costs due to wastage
What are the implications of poor stock control ? Too much or too little
Stock out costs - too little
- loss of good will
- damage rep
- loss of sales rev
- disruption on production
Holding too much stock ?
Opportunity cost - too much working capital could have been invested into something else
Shrinkage - employees stealing - thing it wonβt go a miss
Spoilage costs
Unsold stock
Admin fees - security and staff to check stoke levels
What is JIT ? - Just in time
Business does not keep stock of parts of a warehouse
What do you need if you have JIT?
A good relationship with suppliers- will need raw materials immediately
When does JIT not work ?
When there is delivery or quality issues
No buffer stock
Cannot replace damaged goods
What does JIT work well with?
Lean production -
Production that focuses on minimising wasteοΏΌ
what are the positives of JIT?
No wastage - minimises costs - as parts are only ordered when needed
Less storage costs as stock is not stored
Perishable stock is less likely to go out of date
Business will improve cash flow as money is not tied to stock
What are the disadvantages of JIT?
Business cannot meet sudden spikes in demand or non-standardised orders
Cannot replace damaged goods
If delivery for goods fail to turn up business cannot produce anything l
Cannot buy cheaper bulk - miss out o. Deals
Miss out on economies of scale
What does wate minimisation help improve ? (3)
Help improve efficiency and
reduce unit cost of production
Public image - seen as eco friendly - meet social needs
Avoid fines
What is Kanban ?
Japanese method a card or object indicating to move or provide resources in a factory π
What is lead time ?
The time of placing the order and delivering the goods
What are the 7 deadly wasted that lean production eliminates ?
- Over production which stops the flow of produced good and reduces quality
- Wasting time - eliminated large amounts of lead time
- Transportation time - decrease the cost to transport goods - less raw materials
- Excess processing - when large machineries are used rather than small flexible ones
- Excess stocks
- Excess motion - prevents a tired work force and accidents
- Production quality - prevents machinery to have defects
Less time is required as the production process is organised in the most efficient way
Fewer materials are used as there is a focus on waste reduction
Less labour is used as lean production is typically capital intensive
The space required for production is reduced as a result of just in time stock management
A small number of trusted suppliers work closely with the business
What is stock ?
Raw materials, work in progresses and finished products the business holds to sell to consumers
What are the six factors that may influence your stock levels ?
Demand - whether its constant or not - may need buffer stock due to unpredictability
Stock pile goods - seasonal demand and itβs cheaper to buy raw materials as there in no demand
Cost for stock holding - expensive? Wonβt hold and will be JIT
Amount of working capital available - may not be enough to stock pile
Type of stock - if perishable cannot stock pile or tech goods will go out of date or become obsolete
Lead time - time between ordering your raw materials and delivering it to customers longer ? Buffer stock
External factors - shortages in raw material may increase lead time
How can we Minimalise waste for perishable goodsοΏΌ
We can refrigerate them to prolong the lifeοΏΌ
What can be adopted to reduce waste?οΏΌ 3 ways !
Storage - Refrigerate
security to avoid shrinkageοΏΌ
sales tactics - cheaper or alt use
PlanningοΏΌ-
Stock rotation-
method first in first out stop delivered first must be issued first and older stock Must be usedοΏΌ
Use of computers and staff trainingοΏΌ
How may technology help minimalise waste?οΏΌ
Businesses can use computers to manage stock control when an item is purchased by a customer it automatically subtract an item from the stock levelsοΏΌ
What can businesses reduced to help minimalise waste?οΏΌ
they can reduce the price so that they get bought quicker οΏΌ
What is the competitive advantage from lean productionοΏΌ?
οΏΌ
Lower unit costs are achieved due to minimal wastage so prices may be lower than those offered by competitors
Better quality of output is likely as a result of supplier reliability and carefully managed production processes - can charge premium price
