Operations Flashcards
Name consequences of overstocking
Supplies out of date Supplies out of fashion Risk of theft Additional costs of security and insurance Money tied up, could be used elsewhere
Name consequences of understocking
Stops production
May not meet customers orders
May be unable to achieve unexpected orders
Machine downtime, labour downtime
Loss of bulk buying discounts for small orders
Name features of inventory management system
Max stock level Min stock level Reorder level Reorder quantity Lead time
Advantages of computerised stock control
Databases automatically updated Linked to tills through EPOS Automatic reordering Easier to manage slow moving stock Reduced labour time for stock counting and input Highlights demand patterns
Disadvantages for computerised stock control
Expensive
Training time
Relies on data accuracy
Advantages of JIT
Less wastage Better quality management Less space Reduced cycle times Money not tied into stock Less storage facilities and costs
Disadvantages of JIT
Late deliveries will stop production
Good relationships required with suppliers
Affected by road infrastructure
No room for error in production
Advantages of centralised warehousing
Increased distances of getting stock to required area
Specialised equipment needed
Usage levels may be unclear
Larger areas may lead to stock deterioration
Advantages of decentralised warehousing
Inventory close at hand
More responsive to local needs
Less overstocking
Usage reflects production
Disadvantages of decentralised warehousing
Additional costs of duplicating security etc
Inconsistency between sites
Smaller stock levels may result in understocking
Methods of distribution
Road Rail Air Sea Utilities infrastructure Satellite Mobile networks
Advantages of job production
Higher prices may be charged
Unique product
Customer specifications
Job can be altered to meet changing specs
More skilled and motivated employees
Stay ahead of competition by offering non standard products
Disadvantages of job production
Higher wages to skilled staff High costs may limit customers Long lead times Materials avoid bulk discounts Ex pensive equipment may have limited usage
Advantages of batch production
Batches adapted to customer requirements Batches can be seasonal Standardised machinery Less skilled workers Material can be bought in bulk
Disadvantages of batch production
Long changeovers
Mistakes can affect an entire batch
Employees boredom
Small batches increase unit cost
