3.4.5 Flashcards
(15 cards)
What are the 3 approaches to matching supply to demand?
- Producing to order
- Use of temporary/part-time staff
- Outsourcing
What is producing to order? List 2 pros and cons
= The business only produces when the actual order is placed rather than producing items and hoping they will sell
+ Reduces risk
+ Reduces waste
- Delays can occur
- Longer wait time for productions = lower customer satisfaction
What are temporary employees? List 2 pros and cons
= Staff that are only employed for a limited time when demand is high (eg. Christmas period)
+ Can fulfil demand
+ Lower costs, not on full time wages
- Communication challenges
- Higher turnover risk
What are part-time employees? List 2 pros and cons
= Staff that work less than a full working week (eg. 20 hours) and will be utilised when a business knows demand is high (such as the weekend)
+ Can replace staff if ill
+ Less motivation concerns
- Training costs
- Limited availability
What is outsourcing? List 2 pros and cons
= When a business asks another business to make all/part of its production
+ Can react quickly to changes in demand
+ Flexible, can change capacity when needed
- Risk of poor quality
- Loss of control
List 2 influences on the level of inventory a business might hold
- Type of product sold
- Storage space
List 2 pros of holding high levels of inventory and 2 pros of holding low levels of inventory
High levels:
+ Bulk buy = low costs
+ Can fulfil demand
Low levels:
- Less waste
- Less cash flow issues
What is buffer stock? How do we identify this on inventory control charts?
Extra inventory kept on hand in case of manufacturing delays or an unexpected increase in demand
It is the lowest point on the graph
What is lead time? How do we identify this on inventory control charts?
Time between placing the order and receiving the stock
It can be found by doing: time of delivery - re-order level
What is re-order level? How do we identify this on inventory control charts?
Acts as a trigger point, so when stock falls to this level the supplier order should be placed
It can be calculated by doing: lead time x average daily use + buffer stock
What is re-order quantity? How do we identify this on inventory control charts?
The number/quantity of goods to be re-ordered to fully replenish stock levels
It can be found by measuring the length of the vertical line
List 3 potential issues with inventory control
- Suppliers may be delayed
- Usage rate may be faster
- Could be a failure to reorder inventory
List 2 ways that inventory could be wasted and how this could be avoided
Products may not sell (JIC production) or goods may perish
- Use JIT production
Demand could be lower than expected
- Reduce capacity/buffer stock
What is a supply chain?
All of the providers of resources at different stages of the operations process
List at least 4 things to consider when deciding which suppliers to work with
- Quality
- Flexibility
- Reliability
- Costs
- Ethics
- Location
- Speed of delivery
- Level of trade credit
