Stock control(2.4.3) Flashcards
(20 cards)
What is maximum stock level?
the maximum amount of stock a business is able to hold in normal circumstances
What is reorder level?
the level which a business places a new order with its supplies
What is minimum stock level?
the lowest level to which a business is willing to allow levels to fall
also known as buffer stock level
What is lead time?
the length of time from the point of stock being ordered from the supplier to it being delivered
What is the stock level line?
shows how much stock levels change over the given time period
What is buffer stock?
quantity of goods/raw materials kept in case of a shortage
Buffer stock advantages
stability in supply
price stabilisation
raw material security
competitive advantage
Buffer stock disadvantages
cost
risk of obsolescence
opportunity cost
Poor stock control
holding too much stock
holding too little stock
Holding too much stock - poor stock control
significant storage cost
risk of spoilage and shrinkage
opportunity cost
unsold stock
price reduction
Holding too little stock - poor stock control
risk of stockout
production stoppages
capital and labour underutilised
unexpected increases in demand cannot me met
loss of potential sales
What is just in time stock management?
process in which raw materials are not stored onsite
Just in time
stock is ordered as required and delivered by suppliers just in time for production
careful coordination is needed to ensure that raw materials and components are delivered by suppliers at the moment that they are to be used
Just in time advantages
stockholding costs are minimised
close working relationships are developed with a small number of trusted suppliers
cash flow is improved as money is not tied up in stocks
unused storage space is available for productive use
teamworking is encouraged so employee motivation is likely to be improved
Just in time disadvantages
bulk buying economies of scale are not generally possible
ability to respond to unexpected increase in demand is reduced
administrative costs related to frequent ordering are increased
unreliable suppliers can quickly halt production
significant changes to organisational structure and production controls are required
What is waste management?
the process of reducing the amount of unwanted or unusable resources materials time and effort generated throughout a business operations
Ways to minimise waste
storage
planning
sales tactics
Storage - minimising waste
refrigeration and protection from damage
effective security
careful stock rotation
Planning - waste minimising
diligent forecasting
staff training
computerised stock control
Sales tactics - minimising waste
reduce prices to encourage purchases
alternative uses for obsolete stock
