Managing inventory Flashcards
(11 cards)
What is the problem with holding lots of stock?
High storage costs.
What is lead time?
The time taken for goods to arrive after ordering from a supplier.
What is the formula for re-order level?
Re-order level = lead time x average daily usage + buffer stock level.
What are different ways a business can match supply to demand?
Peripheral workers
Outsourcing
Producing to order
What are peripheral workers?
Temporary workers employed to deal with an increase in demand.
What is an advantage of outsourcing?
Access to expertise.
What is a disadvantage of outsourcing?
Loss of control over quality.
What is producing to order?
When production begins after an order is received.
What is an advantage of producing to order?
Customisation for customers.
What is a disadvantage of producing to order?
Difficulty in dealing with sudden increases in demand.
What are some factors businesses consider when choosing a supplier?
Price
Quality
Reliability
