Unit 44 - Stock Control

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  • Created by: Michelle
  • Created on: 24-10-13 14:16
What is meant by stock control?
The quantity of stock held by a business is vitally important.
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What is stock?
Stock is usually one of the following: Raw materials, Work-in-progress, Finished goods
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What are benefits of holding stock?
1 - Satisfying demand, they have the ability to complete more orders. 2 - Coping with fluctuations in demand. 3 - Buffer stock to meet late deliveries (If the supplier is late, they have some stock to use).
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What are the costs of holding stock or inventory?
1 - Storage costs. 2 - Opportunity costs. 3 - Depreciation/obsolescent costs. 4 - Security costs. 5 - Administrative costs. 6 - Insurance costs.
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What is out-of-stock costs or stock-out-costs?
This is when a business runs out of stock and is therefore unable to continue to produce goods, meaning there is an inability to complete and satisfy the order.
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The maximum stock level is determined by several factors, name a few of these factors:
The storage capacity of the factory/warehouse, The product, The level of sales, The cost of storage, The degree of competition, The timing of marketing campaigns, The time of the year.
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The minimum stock level is determined by several factors, name a few of them:
The level of sale, the amount of time taken to deliver new stock, the history of unforeseen circumstances
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What is the Re-order level?
The Re-order level is determined by the following factors: The amount of time that is taken to re-order to the actual delivery, which is known as lead time. - How near the supplier is. - The sales records to date.
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What is buffer stock?
Buffer stock is the difference between the minimum stock level and holding no stock. The level of buffer stock is determined by: Delays in delivery, speed of the production process, reliability of suppliers, the level and pattern of demand.
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Define lead time.
Lead time represents the length of time between re-ordering the stock and its arrival.
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How do you calculate the average level of stock?
Maximum stock level + minimum stock level / 2 = average stock
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Card 2

Front

What is stock?

Back

Stock is usually one of the following: Raw materials, Work-in-progress, Finished goods

Card 3

Front

What are benefits of holding stock?

Back

Preview of the front of card 3

Card 4

Front

What are the costs of holding stock or inventory?

Back

Preview of the front of card 4

Card 5

Front

What is out-of-stock costs or stock-out-costs?

Back

Preview of the front of card 5
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