Stock Control 🏭

Question 1

What is buffer stock?

Answer 1

Stock wich is held In case there is an unforeseen rise in demand or problem with supply

Question 2

Why do we have buffer stock ?

Answer 2

To ensure production is not effected and customer needs are met

Question 3

What products would not be used within buffer stock

Answer 3

Perishable goods - wastage - not good for capacity utilisation

Technology - goods may become obsolete

Question 4

What are the advantages of having buffer stock ?

Answer 4

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

Question 5

What are buffer stock disadvantages?

Answer 5

Cost of storage increased

More working capita tied to stock- more risk ofLosses and costs due to wastage

Question 6

What are the implications of poor stock control ? Too much or too little

Answer 6

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 won’t go a miss

Spoilage costs

Unsold stock

Admin fees - security and staff to check stoke levels

Question 7

What is JIT ? - Just in time

Answer 7

Business does not keep stock of parts of a warehouse

Question 8

What do you need if you have JIT?

Answer 8

A good relationship with suppliers- will need raw materials immediately

Question 9

When does JIT not work ?

Answer 9

When there is delivery or quality issues

No buffer stock

Cannot replace damaged goods

Question 10

What does JIT work well with?

Answer 10

Lean production -
Production that focuses on minimising waste

Question 11

what are the positives of JIT?

Answer 11

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Perishable stock is less likely to go out of date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

Question 12

What are the disadvantages of JIT?

Answer 12

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

Question 13

What does wate minimisation help improve ? (3)

Answer 13

Help improve efficiency and

reduce unit cost of production

Public image - seen as eco friendly - meet social needs

Avoid fines

Question 14

What is Kanban ?

Answer 14

Japanese method a card or object indicating to move or provide resources in a factory 🏭

Question 15

What is lead time ?

Answer 15

The time of placing the order and delivering the goods

Question 16

What are the 7 deadly wasted that lean production eliminates ?

Answer 16

1. Over production which stops the flow of produced good and reduces quality
2. Wasting time - eliminated large amounts of lead time
3. Transportation time - decrease the cost to transport goods - less raw materials
4. Excess processing - when large machineries are used rather than small flexible ones
5. Excess stocks
6. Excess motion - prevents a tired work force and accidents
7. 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

Question 17

What is stock ?

Answer 17

Raw materials, work in progresses and finished products the business holds to sell to consumers

Question 18

What are the six factors that may influence your stock levels ?

Answer 18

Demand - whether its constant or not - may need buffer stock due to unpredictability

Stock pile goods - seasonal demand and it’s cheaper to buy raw materials as there in no demand

Cost for stock holding - expensive? Won’t 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

Question 19

How can we Minimalise waste for perishable goods

Answer 19

We can refrigerate them to prolong the life

Question 20

What can be adopted to reduce waste? 3 ways !

Answer 20

Storage - Refrigerate
security to avoid shrinkage

sales tactics - cheaper or alt use

Planning-

Stock rotation-
method first in first out stop delivered first must be issued first and older stock Must be used

Use of computers and staff training

Question 21

How may technology help minimalise waste?

Answer 21

Businesses can use computers to manage stock control when an item is purchased by a customer it automatically subtract an item from the stock levels

Question 22

What can businesses reduced to help minimalise waste?

Answer 22

they can reduce the price so that they get bought quicker 

Question 23

What is the competitive advantage from lean production?

Answer 23


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