Inventory Management and Control 📦
Introduction
- Channel focus: A-level business students for exam revisions
- Tutorial topic: Stock/Inventory Control
- Key concept: Consequences of keeping high or low stock levels
Inventory Control Diagrams
- **Axes Explanation: X-axis (time), Y-axis (stock levels) over weeks
Key Elements:
- Maximum Stock Level: Max amount of stock the firm decides to keep (e.g., 50,000 units)
- Buffer Stock Level: Minimum stock level (e.g., 10,000 units)
- Stock Fluctuations: Stock level varies between max and buffer stock levels
- Reorder Level: Point at which new stock is ordered (e.g., 30,000 units)
- Lead Time: Time between placing an order and receiving inventory (e.g., 1 week)
- Reorder Quantity: Amount of stock ordered each time (e.g., 40,000 units)
Terminology Recap
- Maximum Stock Level: Firm's chosen upper limit of inventory
- Buffer Stock Level: Minimum stock company maintains
- Reorder Level: Stock level triggering new order
- Lead Time: Duration for supplier to deliver stock after order
- Reorder Quantity: Difference between max stock and buffer stock levels
High Stock Levels - Advantages
- Meeting Demand: More easily handle unexpected customer orders
- Contingency Plan: Protects production from supplier issues, late deliveries
- Economies of Scale: Bulk purchasing can reduce costs per unit
Low Stock Levels - Advantages
- Cost Savings: Less need for storage facilities
- Liquidity and Cash Flow: More liquid assets, less money tied up in stock
- Reduced Risks: Fewer breakages, theft, perishables going bad
Exam Relevance
- Importance of knowing inventory control terminology
- Reasons for maintaining high or low stock levels
Conclusion
- Key takeaway: Understanding inventory management and its impact on business operations
- Encouragement for continued revision and exam preparation
Good luck with your ongoing revision!