Warehousing

Question 1

Currently, how many months in advance do AFL buy stock?

Answer 1

3 months

Question 2

Advantages of buying stock in advance

Answer 2

Meet sudden demand
Not effected by late deliveries
Discounts for buying in bulk

Question 3

Disadvantages of buying stock in advance

Answer 3

Rent and insurance
Finance- overdrafts needed
Bad for cash flow
Employees take less care, as there’s plenty of stock

Question 4

Just in Time

Answer 4

Materials arrive at the workplace as they are needed, reducing the amount of storage required

Question 5

Advantages of just in time

Answer 5

Less storage
Increases quality as employees get it right first time
Motivates workers- more responsibility
Increases productivity

Question 6

Disadvantages of just in time

Answer 6

If deliveries are late production stops- increasing expenses
Miss out on last minute orders
Need a reliable supplier to delivery often