Storage of Stock

Question 1

type of storage depends on what?

Answer 1

• Type of sock (e.g. perishable)
• Finance available for storage
• Size and location of customers
• How and where will finished goods be transported to

Question 2

what are the two types of inventory?

Answer 2

• centralised

- decentralised

Question 3

what does centralised storage involve?

Answer 3

This involves storing inventory in one central location – a large warehouse

Question 4

what are the advantages of to centralised storage?

Answer 4

• Specialist staff are hired to maintain inventory – speeds up process and improves security.
• Can store large amounts of inventory – can receive bulk buying discounts.
• May be cheaper having one large store for inventory than having multiple smaller locations.

Question 5

what are the disadvantages of to decentralised storage?

Answer 5

• Inventory is stored centrally – takes time to move inventory to areas of production (delays)
• The use of this method has declined due to more efficient methods such as JIT.
• Specialist staff are hired to maintain inventory – increases costs.
• The cost of the warehouse is high.

Question 6

what does decentralised storage?

Answer 6

This involves storing inventory in various locations within the organisation. Each branch or department is responsible for ordering and maintaining its own inventory.

Question 7

what is the advantages of decentralised storage?

Answer 7

• Inventory is always close by when it is required.
• Smaller stores are more responsive to local needs.
• Smaller stores are less likely to face over-stocking consequence.

Question 8

what is the disadvantages of decentralised storage?

Answer 8

• Lack of specialists’ staff so security is not as tight so it can lead to theft.
• Smaller stores are more likely to face consequences of under-stocking.