stock control

• What factors determine the amount of stock held by a business?

  Risk attitude, speed of response, market change
• What is a stock control diagram?


  A tool to control and monitor stock flow
• What does lead time represent in stock control?

  The time from order placement to delivery
• How is lead time represented in stock control diagrams?

  On the horizontal axis from re-order to minimum stock
• What triggers a re-order in stock control?

  The re-order level of stock
• What is buffer stock?

  Stock held for unforeseen circumstances
• What happens when a business reaches its minimum stock level?

  It is left with only buffer stock
• What is the buffer stock method sometimes called?

  Just in Case
• What are the advantages of holding buffer stock?

  • Meets customer demand
  • Responds quickly to demand increases
  • Continues production despite delivery issues
• What are the disadvantages of holding buffer stock?

  • Money tied up in stock
  • Costs of storage and insurance
  • Risk of waste from obsolescence
• What are the implications of poor stock control?

  Waste of resources and damaged reputation
• How does poor stock control affect competitiveness?

  It leads to loss of competitiveness
• What is lean production focused on?

  Cutting waste while improving quality
• What is Just-In-Time (JIT) management?

  A technique to minimize stock holdings
• What are the benefits of JIT management?

  Lower costs and less obsolete inventory
• What are the difficulties associated with JIT management?

  Reliance on suppliers and little room for error
• What are the benefits of efficient stock control?

  • Reduces waste and obsolete stock
  • Lowers holding costs
  • Provides competitive advantage
  • Enables better customer satisfaction
• What is the focus of waste minimization in lean production?

  Increasing efficiencies while maintaining quality
• What is the relationship between stock control and competitive advantage?

  Efficient stock control leads to cost savings
• What does the term "inventory" refer to?

  Products owned by the business for operations
• What was inventory previously called?

  Stock
• What are the types of inventory?

  • Raw materials
  • Work in progress
  • Finished products
  • General supplies
• Why are inventories held by businesses?

  To enable production and meet orders
• What are the benefits of holding inventory?

  • Products ready for immediate use
  • Continuation of sales during delays
  • Generation of revenue despite issues
• What are the costs associated with holding inventory?

  Storage, opportunity, security, and depreciation costs
• What is buffer inventory?

  The minimum inventory to hold for problems
• What is lead time in inventory management?

  Time from ordering to delivery of supplies
• What is reorder level?

  Inventory amount that triggers a new order
• What is reorder quantity?

  The amount ordered each time
• How does an inventory control chart function?

  • Highlights inventory usage
  • Indicates when to reorder
  • Shows reorder quantities
• What happens if a business runs out of inventory?

  It cannot meet customer demand
• What is the implication of failing to reorder inventory?

  Leads to an inventory out situation
• What is the trade-off in inventory management?

  Costs of holding inventory vs. potential problems
• What factors influence buffer inventory levels?

  • Rate of inventory usage
  • Available warehousing space
  • Nature of the product
  • Reliability of suppliers
  • Suppliers' lead time
• Why is effective inventory management important?

  To avoid having too much or too little inventory
• What is a benefit of automatic stock reordering?

  Ensures stock is always available
• What are the disadvantages of holding buffer stock?

  Overload of supply if demand decreases
• Why might a UK firm prefer local suppliers?

  For quick and easy delivery
• What are the implications of poor stock control?

  • Increased costs from excess stock
  • Inability to meet customer demand
  • Cash flow problems due to tied-up money
• How does poor stock control affect customer service?

  Supply does not match demand