2.4.3 Stock Control

• What is the definition of stock control?

  Managing stock levels
• Stock control is important in business for meeting customer demand
• What are the three main types of stock managed by a business?

  Raw materials, WIP, finished goods
• Factors affecting stock control decisions include demand
• Arrange the key functions of stock control in the correct order.

  1️⃣ Tracking stock levels

  2️⃣ Ordering new stock

  3️⃣ Storing stock safely
• Effective stock control reduces waste in business operations.
• How does stock control improve efficiency in business?

  Reduces lead times
• Proper stock control avoids the waste of resources
• Match each stock type with its description:

  Raw Materials ↔️ Unprocessed materials used in production

  Work in Progress (WIP) ↔️ Partially completed products undergoing processing

  Finished Goods ↔️ Completed products ready for sale
• Raw materials are examples of finished goods.

  False
• The Economic Order Quantity method accounts for lead times and shortages.

  False
• What is the primary goal of the Just-in-Time (JIT) method?

  Minimize inventory holdings
• The Just-in-Time method eliminates the risk of obsolescence
• The Just-in-Time method reduces reliance on supplier reliability.

  False
• Which type of goods is the First-In-First-Out (FIFO) method commonly used for?

  Perishable goods
• The FIFO method ensures freshness and reflects current market value.
• The FIFO method may increase tax liabilities during rising prices.
• Match the stock control method with its key principle:

  EOQ ↔️ Calculates optimal order size

  JIT ↔️ Receives materials just before production

  FIFO ↔️ First items purchased are first sold
• The FIFO method requires complex tracking
• The Economic Order Quantity method considers lead times in its calculations.

  False
• What is one drawback of the Just-in-Time method?

  High reliance on suppliers
• The Just-in-Time method is prone to disruptions due to its reliance on supplier reliability.
• Just-in-Time (JIT) aims to receive materials just when needed for production
• A drawback of JIT is its high reliance on supplier reliability
• What does FIFO assume about inventory movement?

  First in, first out
• FIFO ensures freshness of perishable goods.
• A disadvantage of FIFO is higher tax liabilities during rising prices
• What does the EOQ formula calculate?

  Optimal order size
• Work in Progress (WIP) refers to partially completed products
• What is the primary goal of managing finished goods?

  Meeting customer demand
• Effective stock control reduces overall business costs.
• What does the Economic Order Quantity (EOQ) method calculate?

  Optimal order size
• The EOQ formula is $EOQ =$$\sqrt{\frac{2DS}{H}}$, where H represents the holding cost per unit per year.
• The EOQ method assumes constant demand and costs.
• What is the primary goal of the Just-in-Time (JIT) method?

  Minimizing inventory holdings
• A major drawback of JIT is its reliance on supplier reliability
• JIT reduces inventory holding costs.
• What does the FIFO method assume about inventory valuation?

  First items purchased are first sold
• FIFO can result in higher tax liabilities during rising prices
• Match each stock control method with its key principle:

  EOQ ↔️ Calculates optimal order size

  JIT ↔️ Receives materials just before production

  FIFO ↔️ First purchased items are first sold