stock control Flashcards
what is buffer stock
it is the quantity of goods/ raw materials kept just in case of stock shortages
advantages of holding buffer stock
-helps to deal with random increases in demand for a certain product, -price stabilisation ( helps to avoid shortages which would then result in price increases) -gives the company a competitive edge as they can meet demand
disadvantages of holding buffer stock
high cost of holding the stock, risk of the products becoming obsolete eg. trends, opportunity cost of holding the stock when that capital could be reinvested back into the business.
what is JIT (just in time stock management)
it is a process in which the raw materials are delivered when and as the business needs them.
advantages of using JIT
minimises stock holding costs, close relationships are built with suppliers as the business trusts them to deliver on time, cash flow is improved as money is not tied up in stocks, unused storage is available for productive use.
disadvantages of using JIT
lose the ability to respond to unexpected increases in demand which therefore reduces the number of sales, run the risk of having unreliable suppliers.
advantages of using lean production
less time is required as the production process is set up in the most efficient way, fewer materials are wasted, less labour, smaller space is required production, result of JIT stock management, lower unit costs are achieved due to minimal wastage, better quality of output.
what is KANBAN
it is a methodology rooted in lean production, which aims to reduce inefficiencies which is done by visualising workflow.
what is KAIZEN
also known as continuous improvement, an approach of constantly introducing small incremental changes with the aim of improving efficiency and/ or quality, the ideas for improvement come from the workers themselves therefore the change is easier to implement, smaller changes require less capital investment than major changes, the idea that employees should always be looking to improve their performance
