4.4e Inventory Control Flashcards Preview

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Flashcards in 4.4e Inventory Control Deck (12):

Inventory control definition

Way of ensuring a business is flexible and can satisfy the demand for its products


When are low inventory levels useful?

- Rent on property is high
- You sell a perishable good
- You have cash flow problems


Advantages of low inventory levels

- Reduce costs and have lower opportunity costs for your cash
- Less likely that stock will get damaged, go out of date or suffer from obsolescence


When are high inventory levels useful?

- When business can buy resources in bulk
- Product sold has unpredictable levels of demand
- Business has plenty of available storage


Advantages of high inventory levels

- More likely to meet customer demand
- Lower unit costs through bulk buying


Inventory chart definition

Diagram that is used to monitor levels of inventory over a particular period of time
(See diagram)


What is the gap between the minimum level and having no stock called on an inventory chart?

Buffer stock


Buffer stock definition

The amount held as a contingency in case of unexpected orders or in case of any delays from suppliers


Lead time definition

Amount of time between placing the order and receiving the stock


Three factors that reorder level depends upon

1. Lead time from supplier
2. Demand for the product
3. If the market is very competitive


Inventory wastage definition

Loss of inventory without it being sold


Inventory rotation definition

Making sure that new inventory is not placed in front of old inventory.

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