what's the purpose for the inventory management control system?
to consider the quantity of stock to order so that the business neither overstock nor understock as both have neg consequences
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max/econ inventory level-
-the most amount of stock that should be held. Avoids consequences of overstocking
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min inventory level-
-the least amount of stock that should be held. Avoids consequences of understocking
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re-order level-
-at which stock is re-ordered. Computerised inventory systems link to EPOS & automatically re order stock. It avoids running out of stock
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re-order quantity-
-amount that is ordered. Ensures the quantity ordered is not too much or too little.
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buffer inventory-
-a cushion of supply in excess of forecast of demand. Used to reduce the incidence/severity of stock-out situations in sales & provides better customer service.
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lead time-
-time taken between an order being placed & stock arriving. As short a lead time as possible allows the business to react to rush orders.
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main features of JIT inventory control
process of ordering supplies only when they're required for production/when an order's placed by a customer
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costs of JIT
if deliveries are late, business may face neg consequences of under stocking. to work efficiently it requires excellent relationships w suppliers which can take time to develop. relies on good infrastructure between org & supplier. no room for error
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benefits of JIT
lean production as all stock is used for production. improved cash flow & working capital as no money is tied in stock. saved costs as no warehouse is needed. business is more responsive to changing PESTEC
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Other cards in this set
Card 2
Front
max/econ inventory level-
Back
-the most amount of stock that should be held. Avoids consequences of overstocking
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