Stock control 2.4.3

Question 1

What is Stock?

Answer 1

Stock is a current asset held by business to help meet the demand of customers.

Question 2

What is stock control?

Answer 2

Stock control is the control of the flow of stock in a business, and concerns with the ordering management of:

Raw materials
Components
Work in progress
Finished goods

Question 3

What are the three forms stock can be held in?

Answer 3

• Raw materials
• Work in progress
• Finished products

Question 4

The amount of stock held depends upon

Answer 4

• The business attitude of risk.
• Importance of speed of response.
• Speed of change within a market
• Nature of the product

Question 5

What do Stock control diagrams help visualise?

Answer 5

• Lead Time
• Re-order level
• Buffer level of stock
• Re-order Quantities

Question 6

What is Buffer stock?

Answer 6

Stock is held in case there is a problem with the delivery of new stock or a sudden increase in demand.

Inventory is kept by the business in case the delivery is late to prevent the production line from having to stop due to a lack of parts.

Question 7

What is lead time?

Answer 7

It is the time from placing the order to getting the delivery.

Question 8

What are some Advantages of the buffer stock method?

Answer 8

• Can meet customer demand.
• Quickly respond to increases in demand.
• Continue with production even if a problem with stock deliveries.

Question 9

What are some Disadvantages of the buffer stock method?

Answer 9

• Money tied up in holding stock.
• Costs associated with stock holding e.g. storage, staff, insurance.
• Risk of waste e.g. out of date, damaged or obsolete.

Question 10

What are Lean Production techniques?

Answer 10

Working practices derived from Japan that focus on cutting waste whilst maintaining, or improving, quality.

Question 11

What are the 2 Lean Production techniques?

Answer 11

• Just in Time
• Kiazen

Question 12

What are some benefits of JIT?

Answer 12

• Less costs in holding inventory.
• Less working capital required.
• Less obsolete or ruined inventory.
• Lower associated costs e.g. security and insurance
• Avoid having unsold stock.

Question 13

What are some downfalls of JIT?

Answer 13

• Little room for error.
• Very reliant on suppliers.
• Unexpected orders harder to meet.

Question 14

Efficient stock control can reduce waste, Leading to a c____ _____?

Answer 14

Competitive Advantage