Inventory

• What is the overall objective of inventory control?

  Minimize total costs of holding stocks
• How do inventory control charts assist in stock control?

  They automate the stock control process
• What are the key parts of a stock control chart?

  • Maximum level
  • Re-order level
  • Lead time
  • Minimum stock level
  • Buffer stock
• What does the maximum level in stock control represent?

  Max level of stock a business can hold
• What is an example of a maximum stock level?

  800 units
• What is the purpose of the re-order level in stock control?

  It triggers the next supplier order
• What is an example of a re-order level?

  400 units
• What does lead time refer to in stock control?

  Time between placing order and receiving stock
• What is an example of lead time?

  Just under a week
• What is the minimum stock level in inventory control?

  Minimum amount of product to hold in stock
• What is buffer stock?

  Stock held as a contingency for unexpected orders
• What is the purpose of buffer stock?

  To meet unexpected orders and delays
• What factors affect when and how much stock to re-order?

  • Lead-time from the supplier
  • Implications of running out (stock-outs)
  • Demand for the product
• How does lead-time from the supplier affect re-order levels?

  Higher lead times may require higher re-order levels
• What are the implications of stock-outs?

  High re-order level and quantity if damaging
• How does demand for a product influence re-order levels?

  Higher demand normally means higher re-order levels