Business A Level, Edexcel, Theme 2.4.3 - 2.4.4 Questions With Correct Answers Graded to Pass

Factors which influence Stock Levels - type of stock, demand, stockpile goods, the costs of stock holding, external factors, amount of working capital available Buffer Stocks - stocks held as a precaution to cope with unforeseen demand (just-in-case) Advantages of holding Buffer Stocks - prevents halts in production, don't lose regular customers, don't miss out on sale opportunities, quickly respond to customer needs/demand Disadvantages of holding Buffer Stocks - expensive to hold stock, affects cash flow as cash is tied up in stock, increases likelihood of waste Just-in-Time Stock Management (JIT) - where stock is delivered just in time for production Advantages of JIT - more space for productive use, improves cash-flow, reduces waste/obsolete stock, cost of holding reduced Disadvantages of JIT - reliability on suppliers, coping with increased demand = lose customers Implications of Holding too much Stock - spoilage costs, storage costs, opportunity costs, risk of shrinkage, unexpected reduction in demand