PPQ - Operations

Question 1

Explain the disadvantages of just in time stock control. (4)

Answer 1

• It is harder to cope with unexpected changes in demand which means customers may go elsewhere
• Could cause delays in production or possibly halt production as there are no raw materials to use in production
• Increased transport costs due to the number of deliveries taking place
• Increased unit costs due to making small orders as opposed to buying in bulk

Question 2

Discuss the use of just in time (JIT) production. (5)

Answer 2

Advantages

• Less storage may lower rent/premises costs.
• Finance is not tied up in inventory.
• Reduced waste as less inventory is stored, perishables don’t go out of date

Disadvantages

• increased number of deliveries increasing delivery costs
• dependent on reliable supplier