Stock Control Flashcards
(14 cards)
Stock control diagram
illustrates the flow of stock (inventory) into and out of a business over time
Maximum stock level
the maximum amount of stock a business is able to hold in normal circumstances
Reorder level
the level at which a business places a new order with its supplier
Buffer stock
the lowest level to which a business is willing to allow stock levels to fall
Lead time
is the length of time from the point of stock being ordered from the supplier to it being delivered
Buffer stock
quantity of goods/raw materials kept in case of stock shortages to deal with unexpected situations
Pros of buffer stock
- stability in supply
- price stabilisation
- competitive advantage
- raw materials security
Cons of buffer stock
- can be costly, warehouse rent
- risk of obsolescence, stock can deplete if high demand
- buffer stock ties up capital
JIT
- Just in Time (JIT) stock management is a process in which raw materials are not stored onsite
- Stock is ordered as required, and delivered by suppliers ‘just in time’ for production
Pros of JIT
- storage costs are minimised
- cash flow is improved as capital os not tied up
- less unused storage space
Cons of JIT
- bulk buying not possible
- not able to response to unexpected demand
- unreliable suppliers can cause delays
Waste
- when stock becomes obsolete
- perishable items
- damaged
INCREASES COST OF PRODUCTION
Lean production
Lean production involves the minimisation of the resources used in production
- less time
- less materials
- less labour
- less space
- less suppliers
Pros of Lean
- lower unit costs, lower prices
- better quality of output
