Inventory Flashcards
(13 cards)
Advantages of holding inventory?
Supplies readily available and can cope with increase in demand
Orders can be made immediately
Discounts for bulk buying
Disadvantages of holding inventory?
Insurance, warehousing, security and labour costs
Inventory can be stolen damaged or become out of date
What are the features of an effective inventory management system?
Maximum level Minimum level Re-order level Re-order quantity Lead time Buffer
Purpose of inventory control system
Production line can always run
Orders are not delayed
Controlled admin costs
Reduction in storage, insurance and security costs
Less storage needed and less money tied up in inventory
Les chance of inventory deteriorating
Advantages of computerised inventory systems?
Reduced mistakes
Orders placed automatically
Reduced paper so more environmentally friendly
Management make informed decisions about inventory
Easier to identify theft
Advantages of just in time logistics?
Improved cash flow No money tied up in stock Waste and damage reduced Money can be used elsewhere Less spade needed for storing stock Strong relationship with suppliers Business more flexible and responsive to change
Disadvantages of just in time logistics?
Problems if suppliers aren’t dependable Breakdowns leave the business vulnerable Admin and delivery costs increased Vulnerable to sudden increases in demand No benefit from bulk buying discounts
Benefits of centralised storage?
Easier to control and closely supervised
More economical
Procedures and systems for allocation of stock
More cost effective as less duplication of stock
Disadvantages of centralised stock control?
Time wasted going to and from stores
Increased chance of wastage
Harder to meet specialised needs of departments
Purchases and running costs of larger storage space
Expensive to keep staff in stores
Advantages of decentralised storage?
Time saved as each department has its own stock
Less chance of deterioration
Disadvantages of decentralised storage?
More space taken up with small stock areas
More expensive as duplication of resources
Theft more likely within minimum supervision
Warehousing advantages?
Quick and easy layout that’s fit for purposed
Stores securely
Locating stock is easier as it’s stocked in categories
Saves travel costs with efficient delivery systems
Reduced costly duplication
Specialist staff so improved security
Warehousing disadvantages?
Expensive to run
Fire, flood, etc, can affect the whole stock
May be a remote location
