Topic 2.3.2 Business

Question 1

stock

Answer 1

Materials such as supplies of raw materials, components.

Question 2

JIT

Answer 2

just in time

Question 3

just in time stock control

Answer 3

A system where stock is delivered only when it is needed by the production department and so no stocks are kept in the business.

Question 4

discuss the benefit of just in time

Answer 4

This is beneficial because the business does not have to store stock. This is because it’s a system where stock is delivered only when it is needed by the production department and so no stocks are kept in the business. Therefore there is no need to pay for storage space. As a result the business can achieve lower costs. Therefore increasing the business’s ability to make higher profit.

Question 5

discuss the drawback of just in time

Answer 5

A negative impact is the business is unable to meet an unexpected increase in demand. This is because it’s a system where stock is delivered only when it is needed by the production department and so no stocks are kept in the business. Therefore if the business has more customers than it expects it will be unable to make these extra sales. This is because they have no buffer stock in storage. As a result the business misses out on making extra revenue. This is likely to lower profitability for the business.

Question 5

bar gate stock graph

Answer 5

This is used to illustrate the stock control of a business. The maximum stock level, re-order level, minimum stock level. It’s typically used to just in case stock control.

Question 5

procurement

Answer 5

Obtaining the right supplies from the right supplier.

Question 6

supplier

Answer 6

A business which sells products to another business.

Question 6

logistics

Answer 6

Ensuring the right supplies will be ordered and delivered on time to the right destination.

Question 7

quality

Answer 7

This is the standard of the product which is expected by a customers. It provides a USP if it’s better than rivals. The business can also use it to justify charging a premium price. This is because customer are more willing to pay a higher price if this is good. Therefore the business can increase revenue. As a result more profit can be made.

Question 8

discuss the impact of logistical decisions

Answer 8

This can impact on the business’s costs, reputation and customer satisfaction. This is because if supplies arrive to the right destination at the right time this helps to give the business a positive reputation. In addition to this customers are more likely to be satisfied. Therefore leading to repeat purchase and customer loyalty. As a result sales revenue may increase. Therefore leading to higher profit.

However if this is one poorly, the supplies may not arrive to the right destination or may be delivered late. This is likely to cause a negative reputation for the business. This is because late deliveries or incorrect stock orders cause customer dissatisfaction. Therefore customer complaints are likely to rise. This damages the business’s reputation because customer can complaint on the internet. Therefore the business may lose customers and struggle to gain new ones. Causing sales to fall. As a result revenue decreases. This leads to lower profits. If this continues the business may struggle to break-even and eventually make a loss.