Inventory Control Charts

• What are the three main types of stock in a business?

  Raw materials, work in progress, finished goods
• Why are stock control charts particularly useful?

  They help manage stock levels effectively
• What is the cost associated with holding stock?

  Storage, management, and obsolescence costs
• What is the overall objective of stock control?

  Minimize total costs of holding stock
• What is the structure of a stock control chart?

  • Y-axis: Units of stock held
  • X-axis: Elapsed time
  • Maximum level: 800 units
  • Minimum level: 200 units
• If a hoverboard store sells 300 units a week, how long until stock reaches the minimum level from maximum?

  2 weeks
• What is the buffer stock for the hoverboard store?

  200 hoverboards
• What is the reorder level set at for the hoverboard store?

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

  Time between order placement and delivery
• How does a high lead time affect reorder levels?

  It suggests setting a higher reorder level
• What are the factors influencing stock control?

  • Lead time
  • Impact of stock outs
  • Nature of demand
• What are the advantages of holding low levels of stock?

  Reduces holding costs and obsolescence risk
• What are the advantages of holding high levels of stock?

  Handles unexpected strong demand effectively
• What is the key concept of a stock control chart?

  • Maximum level: 800 units
  • Minimum level: 200 units
  • Reorder level: 400 units
  • Lead time: Just under one week