________- just- in- case stock control: stock management strategy that businesses use when they hold a high level of stocks because there is a risk of "stock- out.
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JIT
________- just- in- time stock control: stock- control method that aims to avoid holding stocks by requiring supplies to arrive just as they are needed in production and completed products are produced to order.
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supply chain
Managing the ________ and stock (inventory) levels are important operations management responsibilities.
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Productivity
________: ratio of outputs to inputs during production, e.g.
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Cost minimization
________- to remain competitive.
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Re order
________ stock level: level of stocks that will trigger a new order to be sent to the supplier.
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Re order quantity
________: number of units ordered each time.
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Supply chain
________: every business that comes into contact with a particular product for example, the ________ for most products will be all the businesses manufacturing parts for the product, assembling it, delivering it and selling it.
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Cost minimization
to remain competitive
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Consistent and reliable supply of products
to satisfy customer demand
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Supply chain
every business that comes into contact with a particular product for example, the supply chain for most products will be all the businesses manufacturing parts for the product, assembling it, delivering it and selling it
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Stock (inventory) control
the difference between JIT and JIC
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Stock (inventory)
materials and goods required to allow for the production and supply of products to the customer
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Economic order quantity (EOQ)
optimum or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs
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Buffer stocks
minimum stocks that should be held to ensure that production could still take place should a delay in delivery occur or production rates increase
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Re-order quantity
number of units ordered each time
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Lead time
normal time taken between ordering new stocks and their delivery
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Re-order stock level
level of stocks that will trigger a new order to be sent to the supplier
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Capacity utilization
proportion of maximum output capacity currently being achieved
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Excess capacity exists when the current levels of demand are less than the full capacity output of a business
also known as spare capacity
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Productivity
ratio of outputs to inputs during production, e.g
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Level of production
number of units produced a during a time period
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Supply chain
Every business that comes into contact with a particular product for example, the supply chain for most products will be all the businesses manufacturing parts for the product, assembling it, delivering it and selling it
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Stock (inventory)
Materials and goods required to allow for the production and supply of products to the customer
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Just-in-time (JIT) stock control
Stock control method that aims to avoid holding stocks by requiring supplies to arrive just as they are needed in production and completed products are produced to order
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Just-in-case (JIC) stock control
Stock management strategy that businesses use when they hold a high level of stocks because there is a risk of "stock-out"
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Raw materials and components; work in progress; finished goods
3 forms in which manufacturing businesses will hold stocks
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Opportunity cost; storage costs; risk of wastage and obsolescence
3 costs associated with stock-holding
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Lost sales; idle production resources; special orders could be expensive; small order quantities
4 costs of not holding enough stocks
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Economic order quantity (EOQ)
Optimum or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs
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Buffer stocks
Minimum stocks that should be held to ensure that production could still take place should a delay in delivery occur or production rates increase
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Re-order quantity
Number of units ordered each time
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Lead time
Normal time taken between ordering new stocks and their delivery
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Re-order stock level
Level of stocks that will trigger a new order to be sent to the supplier
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Capacity utilization
Proportion of maximum output capacity currently being achieved
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Excess capacity
Excess capacity exists when the current levels of demand are less than the full capacity output of a business also known as spare capacity
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Productivity
Ratio of outputs to inputs during production, e.g. output per worker per time period
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Level of production
Number of units produced a during a time period
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Improve the training of employees to raise skill levels; improve worker motivation; purchase more technologically advanced equipment; more effective management
4 ways in which productivity levels could be increased
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Opportunity cost
Working capital tied up in stocks could be put to another best alternative use. The capital might be used to pay off loans, buy new equipment or pay off suppliers, or could be left in the bank to earn interest
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Storage costs
Stocks have to be held in secure warehouses. They often require special conditions, such as refrigeration. Staff will be needed to guard and transport the stocks, which should be insured against fire/theft
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Risk of wastage and obsolescence
If stocks are used or sold rapidly as expected, then there is an increasing danger of goods deteriorating or becoming outdated. This will lower the value of such stocks
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