Stock Control

• what does stock control diagram illustrates?


  the flow of stock (inventory) into and out of a business over time
• maximum level?


  maximum amount of stock a business is able to hold in normal circumstances
• reorder level?


  level at which a business places a new order with it's suppliers
• minimum stock level?


  lowest level to which a business is willing to allow stock levels to fall
• lead time?


  length of time from the point of stock being ordered from suppliers to it being delivered
• stock level line shows how stock levels change over the given time period:


  • as stock is used up a downwards slope is plotted
  • when an order is delivered by a supplier the stock level line shoots upwards
• buffer stock?


  quantity of goods/raw materials kept in case of stock shortages
• buffer stock:


  • this can provide a competitive edge over rivals unable to meet demand
  • approach is called 'just in case' stock control
• advantages of holding buffer stock:


  • stability in supply
  • price stabilisation
  • raw materials security
  • competitive advantage
• disadvantages of holding buffer stock:


  • expensive
  • stock could be outdated
  • opportunity cost
• what happens if a business is holding too much stock?


  • storage costs
  • risk of spoilage
  • shrinkage
  • opportunity cost
  • unsold stock
  • price reduction
• what happens if a business is holding too little stock?

  • increase in demand cannot be met
  • loss
  • risk of stockout
  • production stoppages
  • capital and labour under utilised
• just in time?


  process in which raw materials are not stored onsite but ordered as required and delievered by suppliers 'just in time' for production
• why is careful coordination for just in time management required?


  to ensure that raw materials/components are delivered by suppliers at the moment that they are to be used
• advantages of JIT management:


  • stockholding costs minimised
  • cash flow improves
  • unused storage space would be used
  • teamwork is encouraged
• disadvantages of JIT management:


  • not possible to bulk buying economies of scale
  • ability to respond to increase in demand is reduced
  • administrative cost increases
  • unreliable suppliers can halt production
  • changes to organisation structure and production control are required
• why does wastage occur?


  • stock becomes expired
  • damaged stock are not used
• unchecked waste increases unit costs of production and reduces efficiency and production
• ways to minimise wastage:

  • store properly (fridge)
  • plan
  • sales tactics
• lean production?


  minimisation of resources used in production
• what is the competitive advantages from lean products?


  • less time required
  • fewer materials used
  • less labour used
  • spaced required is reduced
• how does lean production lead to competitive advantages?


  • lower unit costs achieved - minimal wastage so price may be lower than competitors pricing
  • better quality of output as a result of suppliers reliability and carefully managed production processes