Purchasing

Question 1

Types of stock

Answer 1

Raw materials
Work-in-progress
Finished goods

Question 2

Just-in-time

Answer 2

Business does not keep stock. Goods are ordered as and when they are needed.

Question 3

Advantages of just-in-time

Answer 3

No cost of holding stock as materials go straight onto the production line
Products are not made unless an order has already been placed

Question 4

Disadvantages of just-in-time

Answer 4

Advantages of bulk buying may be lost
If suppliers do not deliver on time the manufacturer’s reputation may be damaged