2.4.3 Stock Control

• Inventory - the raw materials, work-in process & finished goods held by a firm to enable production & meet demand
• Re-order level - acts as a trigger point, so that when inventory falls to this level, the next supplier order should be placed
• Lead time - amount of time between placing and receiving the inventory
• Just In Time - inventory required for production arrives just as it is needed
• Lean production - focus on reducing waste while ensuring quality by making the business more efficient & responsive to market trends
• Costs of holding stock:

  • storage costs
  • wastage costs
  • opportunity costs
• Reasons to hold stock:

  • enable production to take place
  • satisfy customer demand
  • precaution against supply delays
  • allow efficient production
  • allow for seasonal changes
  • provide buffer between production processes
• Stock Control Diagram

  A) Stock

  B) units

  C) time

  D) lead time

  E) buffer stock

  F) re-order

  G) Max

  H) Min