Needs to be enough to keep up with customer demand
Costs more to transport further
Goods will be damaged.
What are the 3 systems of operating systems?
Input - materials and labour. Process - Using resources to produce products for sale and Output - Goods and Services
What is system design?
Working out suitable factory layout, Deciding on the flow of work, Labour requirements and Machinery v. People
What are problems with overstocking?
High storage costs, Might go out of date, Capital is tied up in stock and If trends change it can be hard to get rid of the stock.
What are problems with understocking?
Nothing to sell (production may stop), No bulk buying discount, Customers go elsewhere, Increased admin costs, Poor reputation, Loss of sales which = loss of profit.
What is lead time?
Maximum stock levels reached after delivery. Stock levels decline during production, When stock level reaches the re- order level it triggers a new order. The difference between the time of delivery and the time of re order is lead time.
