3.2 Stock management

Question 1

Production methods to manage stock.

Answer 1

• Just in time (JIT)
• Just in case (JIC)

Question 2

Advantages of JIT production.

Answer 2

• Type of lean production - leads to improved efficiency.
• Saves on storage costs (cost of holding buffer stock)

Question 3

Advantages of JIC production.

Answer 3

• Purchasing economies of scale (lower average cost per unit)
• Spare stock to satisfy unexpected demands.

Question 4

Disadvantages of JIT production.

Answer 4

• Cost of more frequent deliveries
• Lost purchasing economies of scale (no bulk-buy for stock).
• May not be able to meet sudden increases in demands

Question 5

Disadvantages of JIC production.

Answer 5

• Cost of holding buffer stock.
• Products may get out of trend before sold.

Question 6

Factors affecting choice of supplier.

Answer 6

• Price
• Quality
• Reliability (certainly in JIT)

Question 7

Procurement

Answer 7

Process of acquiring goods and services, typically for businesses (concerns suppliers).

Question 8

Logistics

Answer 8

Process of planning, organising and managing of the flow of goods and services from the point of origin to the point of consumption (concerns transportation).

Question 9

Effects of procurement and logistics on businesses.

Answer 9

• Increase efficiency.
• Lower unit costs (lower quality?)

Question 10

Benefits of managing an effective supply chain.

Answer 10

• Key processes run more efficiently and cost efficiently, with the help of suppliers.
• Obtain commodities for best price and value.
• Cut waste and unnecessary costs to create streamlined process and fast production times.

Question 11

Supply chain

Answer 11

Sequence of processes involved in production and distribution of a commodity.