inventory

• inventory

  any item stored by a business for production or sales
• purpose of inventory control systems

  anticipates running out of inventory before it happens, ensures production is consistently running, ensures orders are not delayed, minimises storage space required, avoids high storage costs, minimises insurance costs for inventory on storage, reduces security required, minimises money tied up in inventory, minimises inventory deteriorating
• stock control

  5 features - maximum stock level, minimum stock level, reorder level, reorder quantity, lead time
• maximum stock level

  most amount of stock that should be held
• minimum stock level

  last amount of stock that should be held
• reorder level

  level at which stock is reordered
• reorder quantity

  amount that is ordered
• lead time

  time taken before an order being placed and stock arriving
• disadvantages of overstocking

  supplies could go out of date or fashion, staff may steal stock, high stockholding costs, low opportunity cost as money is tied up in stock
• disadvantages of understocking

  stock may run out, business will not benefit from bulk buying due to smaller orders, sales may halt, bad reputation and customers not returning, increase in delivery costs, increase in administration costs