stock control

Question 1

what is buffer stock?

Answer 1

excess stock held to cover sudden increases in demand or shortages in stock

Question 2

what are stockpile goods?

Answer 2

when you build up stocks months before you need it as it is cheaper, for example, a toy manufacturer build up stocks of toys months before christmas

Question 3

what is the lead time on a stock control diagram?

Answer 3

the time between placing the order and the arrival of goods

Question 4

what is the re-order level on a stock control diagram?

Answer 4

the level of stock when new orders are placed

Question 5

what is re-order quantity?

Answer 5

the amount of stock ordered when an order is placed

Question 6

what is stock rotation?

Answer 6

thr flow of stock in and out of storage

Question 7

what is a work in progress product?

Answer 7

partly finished goods

Question 8

give 3 disadvantages of holding too much stock

Answer 8

spoilage costs: perishable goods may deteriorate over time

opportunity cost: money spent on stock that isn’t being sold could have been used more effectively elsewhere, like buying new machinery

storage costs: the stocks are expensive to hold in the warehouse and take up a lot of space

Question 9

3 diadvantages of holding too little stock

Answer 9

• can’t cope with sudden surges in demand - customers are let down
• if stock deliveries are delayed, firm may run out of stock
• don’t benefit from e.o.s due to more and small purchases rather than less and large purchases

Question 10

what is Just-in-time?

Answer 10

when you order stocks to arrive right when you need it

Question 11

3 adv of just in time

Answer 11

• improves cash flow since money isn’t tied up in stocks
• reduces waste
• more factory space

Question 12

3 disadvantages of just in time

Answer 12

• lots of faith is placed in the hands of suppliers (late delivery would be bad)
• increased ordering rate
• can’t benefit from e.o.s

Question 13

4 ways a business can minimise waste

Answer 13

• perishable goods must be stored in refrigerated units
• correct and accurate forecasting on how much is needed when ordering stock
• stock rotation (FIFO) to use older stock up first
• low pricing for products near their sell-by date (reduced)

Question 14

how does lean production give a business a competitive advantage?

Answer 14

lean production:
* raises productivity
* reduces costs and cuts lead times
* lowers number of defective products
with these improvements, a business will be able to charge lower prices, offer better quality and reliability