Stock includes raw materials, work in progress and finished goods. Accurate records and physical checks help identify losses and avoid relying on quantities that are not actually available or usable.
Reorder level is the trigger for replenishment; lead time is order to usable receipt; buffer stock absorbs uncertainty. Fictional usage 20 per day × two-day lead time + 20 buffer = 60-unit reorder level. Ordering 60 units brings the 20 units left at delivery back to 80 under the simple model.
A fictional stock-control cycle
Approaches
JIT aims for low average stock with supplies close to use. JIC retains extra stock to reduce shortage exposure. A hybrid can fit different items: a perishable ingredient and a long-life critical component need not use the same buffer.
Compare storage, waste and funds tied up against ordering frequency, lost bulk discounts and disruption. JIC is not entirely safe, and JIT is not automatically best for a particular industry. Reliability, alternatives, shelf life and the cost of failure inform the choice.
Low stock and spare stock
Costs of holding stock
Holding stock can involve space, security, insurance, deterioration, spoilage and obsolescence. Funds tied up cannot be used elsewhere; this is an opportunity cost, not necessarily a separate immediate cash payment.
Stock rotation and checks can reduce avoidable loss. Extra purchases made for a discount are worthwhile only if savings justify holding costs and likely demand; unsold or obsolete items may destroy the apparent saving.
Suppliers
Procurement covers sourcing, selection and purchase. Assess price, conformance quality, delivery reliability, speed, payment terms, capacity and responsible practices. Longer agreed credit can help cash timing but does not reduce the bill automatically.
Fictional 100-unit order: A costs £2 each + £20 delivery + £30 expected defect cost = £250. B costs £2.20 each + £10 delivery + £5 expected defect cost = £235. B has the higher unit price but lower estimated total on these assumptions; uncertainty and other requirements still matter.
Compare a fictional 100-unit order
Supply chains
Supply chains link organisations and activities from inputs through production and customer supply, with information and returns as well as goods. Relationships can support coordination but do not guarantee discounts, priority or reliability.
Ethical sourcing considers labour, human-rights, environmental and trading practices. Fair trade broadly seeks better terms; Fairtrade certification has specific standards, independent checks, premiums and applicable price rules. Verify the scope rather than equating local origin or a label with proof of every ethical or environmental claim.
Check sourcing claims
Logistics
Logistics coordinates transport, warehousing, fulfilment and returns. Compare total cost, reliability, capacity, handling, door-to-door time and environmental effects; transport modes can be combined and no mode is always fastest or cheapest for every route.
An online retailer should make realistic promises matched to target needs, including tracking or return arrangements where useful. Urgent delivery, slower economy services and collection can serve different customers. A low transport charge may be offset by storage, damage, missed sales or delay.
Match delivery to the offer
投影片
Sign up free to view the lesson slides
Step through every slide for this topic — plus flashcards and revision notes — with a free account.
Da firm that provides goods or services to another firm
3.What is raw material?
Easy
Aa wage
Ba loan
Cbasic input used to make products
Da finished product
4.What is work in progress?
Easy
Awaste
Bpartly finished goods
Cfinished goods
Draw materials only
5.What are finished goods?
Easy
Acompleted products ready for sale
Braw materials
Cwaste
Dtools
6.What is a re-order level?
Easy
Athe maximum stock
Bthe minimum wage
Ca price
Dthe stock level that triggers a new order
7.What is lead time?
Easy
Atime to pay wages
Btime to open
Ctime from ordering to delivery
Dtime to sell stock
8.What is JIT?
Easy
Aordering yearly
Bholding minimal stock and receiving deliveries as needed
Cholding large stock
Dholding no suppliers
更多題目
9.What is just in case?
Easy
Aholding additional stock to reduce shortage risks
Bholding no stock
Cordering as needed
Ddelivering daily
10.Which cost arises from holding perishable stock?
Easy
Aextra sales
Blower storage
Cfaster delivery
Dwastage
11.What is obsolescence?
Easy
Astock increasing
Bstock being delivered
Cstock becoming out of date
Dstock becoming new
12.What is procurement?
Easy
Astoring goods
Bthe process of buying goods and services
Cselling goods
Dmaking goods
13.Which measure most directly describes whether a supplier delivers as agreed?
Easy
Athe proportion of deliveries arriving on time and complete
Bthe supplier’s list price alone
Cthe buyer’s advertising slogan
Dthe buyer’s profit target
14.Which is a direct measure of supplied items meeting the agreed quality requirement?
Easy
Adays of payment credit allowed
Bdistance to the supplier
Cthe quoted delivery charge
Dthe percentage of received items with defects
15.What are credit terms?
Medium
Aa tax
Ba bank loan
Ctime allowed to pay for goods
Ddiscount for cash only
16.What is a supply chain?
Medium
Aa price list
Bthe sequence from raw materials to customer
Ca type of loan
Da staff chart
17.What is ethical sourcing?
Medium
Aassessing labour, environmental and trading practices in purchasing
Bbuying the cheapest regardless
Cavoiding suppliers
Dbuying only locally
18.What is fair trade?
Medium
Atrade with no rules
Btrade in arms
Ctrade with high tax
Dtrading approaches seeking better terms for producers and workers
19.What is logistics?
Medium
Amanaging profit
Bmanaging tax
Cmanaging transport, storage and delivery
Dmanaging wages
20.Fictional urgent long-distance shipment: air is quoted at two days and sea at twenty days. Which has the shorter quoted transit time?
Medium
Aneither has a quoted time
Bair
Csea
Dboth have the same quoted time
21.Fictional bulk shipment: sea transport is quoted at £100 and air at £300. Which has the lower quoted transport charge?
Medium
Asea
Bair
Cboth quotes are equal
Dthe figures do not permit comparison
22.What is a warehouse for?
Medium
Amaking goods
Bselling goods only
Cpaying staff
Dstoring goods
23.Why might a firm hold buffer stock?
Medium
Ato reduce sales
Bto raise costs deliberately
Cto reduce shortage risk if delivery is late or demand rises
Dto waste money
24.Why might JIT be risky?
Medium
Asuppliers disappear
Blate delivery may halt work when there is little buffer
Cstorage costs rise
Dstock is wasted
25.Why might a firm pay more for a reliable supplier?
Medium
Alower disruption costs may justify the extra purchase cost
Bto lose customers
Cto cut quality
Dto save nothing
26.Why might good supplier relationships help?
Medium
Ano benefits
Bhigher prices always
Cmore risk
Dpotentially better cooperation, information and agreed terms
27.Which condition most directly supports operating with low stock under JIT?
Easy
Ano access to supply information
Bfrequent unplanned shutdowns with no recovery plan
Creliable usable deliveries and coordinated schedules
Dunpredictable unusable deliveries with no alternatives
28.Why should an online retailer offer a delivery promise appropriate to its target customers?
Easy
Ato avoid customers
Bdelivery cost, reliability and timing affect the total customer experience
Cdelivery is irrelevant
Dto reduce sales
29.Buffer stock is a planned safety reserve intended to absorb some uncertainty.
Easy
True or false?
30.JIT means holding large stocks.
Easy
True or false?
31.Holding stock has costs such as storage and insurance.
Easy
True or false?
32.Ethical sourcing considers working conditions.
Easy
True or false?
33.Lead time is the time between ordering and delivery.
Medium
True or false?
34.Which are costs of holding stock?
Medium
Astorage
Binsurance
Cwastage
Dobsolescence
Eextra sales
35.Which affect supplier choice?
Medium
Aprice
Bquality
Creliability
Dcredit terms
Esupplier's hobby
36.Evaluate just in time for a restaurant.
Medium
37.A fictional store uses 20 units per day, expects a two-day lead time and chooses a 20-unit safety buffer. Under the simple usage-plus-buffer rule, what is its reorder level?
