2.4.3 Stock Control (1/4) Flashcards
Stock
Materials and goods held by a business in order to supply to a cusomter
The 3 types of Stock
1) - Raw materials & Components
2) -Work in Progress (WIP) - ( It’s Partly finished goods that are awaiting completion)
3) -Finished goods
main aspect of stock control
Attempting to maintain the right levels of stock
Why is it important to maintain the right levels of stock
1) Costs - want the costs of holding them minimised
2) Want to ensure that stock does’t run out, so there isn’t a halt in production and customers aren’t let down.
Working Capital
the amount of capital available that a company can readily use for day to day activities
Lead time
The time between placing the order and the delivery of goods
Factors that influence stock controls
1) Demand
2) The costs of holding stocks
3) The type of stock
4) Lead time
5) Amount of working capital
6) External factors
How does demand influence stock levels
sufficient levels of stocks needs to be held in order to satisfy normal levels of demand
How does costs of stock holdings influence stock levels
If stock is expensive to hold then only a small quantity of stock will be held
How does the type of stock that a business has influences stock levels
If a business produces products that are perishable then they should only hold small stock
How does Lead time influence stock levels
The longer the lead time, the higher level of stock needed
How does the amount of working capital available influence stock levels
A business needs to ensure that they have working capital available in order to purchase stocks.
A business that is short of working capital may not be able to purchase stock - even if it is needed
How does external factors influence stock levels
There maybe fear of future shortages due to external factors e.g war
may lead to holding higher levels of stock as a precaution.
