Managing Stock Flashcards

All 7 cards in this deck

What is just-in-time (JIT) stock control?

A stock control method where a business receives regular deliveries of only what is needed before existing raw materials run out, with no buffer stock held.

What is just-in-case (JIC) stock control?

A stock control method where a business holds excess buffer stock so stock is always available if required.

What is buffer stock?

A minimum level of stock a business holds at all times to reduce the risk of running out if deliveries are late.

What is lead time?

The time it takes from ordering stock for it to arrive.

Give two drawbacks of using just-in-time (JIT) stock control.

A fault or delay in orders can slow or halt production; there is only limited stock to fall back on. (Also: frequent small deliveries at short notice, no bulk-buy discounts.)

Why might a business with perishable stock (e.g. fresh food with a one-month shelf life) avoid just-in-case stock control?

Unsold perishable stock would have to be thrown away, wasting capital that could have been spent elsewhere.

True or false? Holding buffer stock ties up capital that could have been used elsewhere in the business.

True. Money spent on stock sitting in storage cannot be invested in other ways of increasing revenue, and storage costs rise too.