purchasing

• What is an important part of operations management?

  Effective stock management
• Why is purchasing stock at the required quality important?

  It is key for the production process
• What does effective stock management ensure?

  Smooth flow of goods to consumers
• What are part-finished goods also known as?

  Work in progress
• What happens to part-finished goods in a factory?

  They are moved to the next stage quickly
• When are finished goods made in relation to customers?

  After customers are found for them
• What are the key aspects of effective stock management?

  • Purchasing
  • Availability of stock for manufacturing
  • Management of part-finished goods
  • Timely delivery of finished goods
• What is the maximum stock level?

  The highest amount of stock allowed
• What is the minimum stock level?

  The lowest amount of stock to maintain
• What is lead time in stock management?

  The time taken for delivery after ordering
• What is reorder level?

  The stock level at which a new order is placed
• What are buffer stocks?

  Large stock holdings kept 'just in case'
• Why were buffer stocks maintained in the past?

  Due to interruptions in supplies
• What has changed in the industrial landscape regarding stock management?

  Emphasis is now on reducing stock holdings
• What is a just-in-time (JIT) system designed to do?

  Minimise costs of holding stocks
• What is required for JIT to operate effectively?

  A very efficient ordering system
• Why is a well-trained workforce important for JIT?

  They can be trusted and work in teams
• What can happen if suppliers do not deliver on time in a JIT system?

  The production line can come to a halt
• What are the systems and relationships needed for effective stock management?

  • Effective relationships with suppliers and customers
  • Internal supply chain operates like external supply
  • Integration of systems using EPOS and barcoding
• What are the advantages of effective stock management?

  • Reduction in working capital
  • Improved customer relationships
  • Freeing of storage space
  • Less stock wastage
  • Easier stock rotation
• Why is purchasing important in business?

  Purchasing helps organizations acquire necessary resources, control costs, ensure quality, and manage risk.
• What is the significance of working with suppliers?

  Building strong relationships with suppliers, fostering innovation, improving quality, and enhancing reputation.
• What is stock control?

  The management and coordination of inventory levels to ensure the right quantity of stock is available at the right time to meet customer demand.
• What are the goals of stock control?

  Maintain optimal inventory levels, reduce stockouts, reduce overstocking, and improve accuracy.
• Why is controlling stock important?

  Reduces stockouts and overstocking, improves cash flow, enhances customer satisfaction, reduces inventory costs, improves supply chain efficiency, reduces wastage and obsolescence, and increases reporting accuracy.
• What are the benefits of effective stock control?

  better cash flow, improved customer satisfaction, reduced inventory costs, improved supply chain efficiency, reduced wastage and obsolescence, and increased reporting accuracy.
• What is computerized stock control?

  A system that uses computer technology to manage and track inventory levels, monitor stock movements, and optimize stock levels in real-time.
• What are the advantages of computerized stock control?

  Improved accuracy, increased efficiency, enhanced decision-making, better forecasting, and improved customer satisfaction.
• What is the re-order level in stock control?

  The point at which an item's stock level is low enough to trigger a re-order, calculated as (Average Daily Demand × Re-Order Interval) + Safety Stock.
• What factors affect the re-order level?

  Average Daily Demand, Re-Order Interval, and Safety Stock.
• What is lead time in stock control?

  The time gap between the moment an order is placed and the moment the ordered goods arrive at the organization's warehouse or storage area.
• How is lead time calculated?

  Order Cycle Time + Production Time + Transportation Time.
• What is buffer stock in stock control?

  An amount of inventory held in excess of the calculated reorder point to prevent stockouts due to uncertainty, variability, and potential delays in receiving new shipments.
• What is the purpose of buffer stock?

  To absorb uncertainty, compensate for variability, and ensure a minimum acceptable inventory level.
• What is the minimum stock level?

  The lowest inventory level that an organization is willing to hold, representing the minimum quantity of inventory that must be maintained to meet customer demand and avoid stockouts.
• How is the minimum stock level calculated?

  Reorder Point + Buffer Stock.
• Holding too much stock?

  Waste, excess costs, opportunity costs, reduced flexibility, and negative impact on reputation.
• Holding too little stock?

  Stockouts, lost sales, overtime costs, damage to reputation, and reduced flexibility.
• Impact of holding too much stock on businesses?

  Increased costs, reduced cash flow, decreased productivity, and negative impact on reputation.
• Impact of holding too little stock on businesses?

  Lost sales, reduced customer satisfaction, increased costs, and negative impact on reputation.