Edexcel Business Studies A level: Theme 2.4 Questions With Correct Answers Graded A+

2.4.3 - 2.4.3 Stock control - The control of the flow of stock in a business, it concerns the ordering and management of: Raw materials/components Work-in-progress Finished goods JIT - system of delivering parts to the assembly line in a continuous flow, rather than stockpiling large volumes at the plant JIT requirements - 1. We need a minimum amount of stock so that we have enough ready if needed. (Buffer Stock) 2. We must never run out of stock. (Minimum stock) 3. We must order supplies at the right time so that supplies are replenished when stock is getting low. (Re-order Level) 4. We need to know how much stock to re-order. (Re-order Quantity) 5. We need to know how long our suppliers will take to supply our stock when we put in an order. (Lead Time) JIT advantages - - As parts are ordered as they are needed there is no wastage which fits the TQM (total quality management) theory of zero wastage - Parts are not warehoused which is a massive cost saving in terms of premises and staff - Less capital tied up in stock, therefore reduced average costs of production of each item JIT disadvantages - - no spare finished products to meet demand - little room for mistakes - production is heavily reliant on supplier - if the delivery doesn't arrive the product can't be made Kanban - Materials requirement planning technique developed by Toyota Corporation (as a part of just-in-time inventory system) in which work-centres signal with a card when they wish to withdraw parts from feeding operations or the supply bins. Kanban means a visible record (such as a billboard, card, label, or sign) in Japanese. Buffer stock - stock held in case there is an unforeseen demand - raw materials - work-in-progress - finished goods