2.4.3 Stock control

• What is stocks?

  Represent the raw materials, work in progress and finished goods held by a firm to enable production and meet customer demand.
• Processes for stocks:

  Raw materials come from suppliers used in the production process. Work in progress is semi or part-finished production. Finished goods are completed products ready for sale or distribution.
• Key reasons to hold stock?

  • Enable production to take place
  • Satisfy customer demand
  • Precaution against delay from suppliers
  • Allow efficient production
  • Allow for seasonal changes
  • Provide a buffer between production processes
• Influences on the amount of stock held?

  • Need to satisfy demand 
  • Need to manage working capital (opportunity cost)
  • Risk of stock losing value