This document discusses stock control and inventory management. It describes the different types of stock a company holds, including raw materials, work in progress, and finished goods. It also outlines the benefits and costs of holding stock, factors to consider when choosing suppliers and determining optimal stock levels, and methods for storing stock, including centralized versus decentralized storage. The document also provides an overview of just-in-time manufacturing and considers various transportation options for logistics and distribution.

1. Operations
Stock Control

2. Stock refers to unused
quantities of
 Raw Materials
 Work in progress
 Finished Goods

3. Benefits of having stock
 Large order can mean discounts
 Less chance of running out of stock
 Work is never delayed or stopped due
to lack of raw materials which would
have meant no sales

4. Costs of Holding Stocks
 Opportunity Cost – other uses for
money tied up in stock
 Storage Costs
 Spoilage Costs

5. Choosing Suppliers
 Price
 Quality
 Availability
 Location

6. A poor purchasing mix results
in
 Over or understocking
 Increased costs
 Poor quality stocks

7. Deciding on level of stock to
hold
 Economic Stock Level – a stock level that will
minimise both stock holding and running out of
stock costs
 To calculate ESL the following information is
required
 maximum stock level to be held
 minimum stock level to be held
 delivery time for stock to arrive
 stock level when new order should be placed
 stock amount that should be ordered

9. Values for figures depend on
 Demand for finished product
 Seasonal Factors
 Amount of cash available to buy stock
 Type of stock – eg perishable,
fashionable
 Space available to hold stock

10. Past Paper Qus
 Discuss why it’s important to set your Re-order
level correctly (5)
 What does the term lead time mean? (1)

11. Stock Control – Part 2

12. Deciding on the best way to
store stock
 Centralised Storage – All stock kept
together in one place
 Decentralised Storage – Stock kept in
separate places

13. Advantages of centralised
 Better security as stock is stored in one
place and is usually controlled by
specialist staff.
 Efficiency is improved because it is run
by dedicated staff.
 Specialist staff will follow agreed
procedures.

14. Disadvantages of centralised
 Setting up a dedicated storage facility
could be expensive
 Depending on the location of the stock,
employees may “waste” time travelling
to and from the location when they
need a resource

15. Advantages of decentralised
 Stock is always ‘at hand’ when required
 Order of new stock reflects actual
production usage or sales levels for
individual areas

16. Disadvantages of
decentralised
 Storage space is required in a number
of locations for stock
 The level of security is harder to
maintain across a number of locations

17. TASK
 RESEARCH JJUUSSTT IINN TTIIMMEE
 Provide a description with advantages
and disadvantages

18. Just in Time
 Holding zero or few stocks and
purchasing materials only when
required

19. Benefits of JIT
 More cash available
 Less costs associated with holding
stocks
 Less wastages and obsolescence
 All the above results in increased profits

20. Drawbacks of JIT
 Difficult to respond to changes in
demand
 Higher transport costs
 No opportunity for economies of scale
by buying in bulk
 Requires reliable suppliers
 Delivery problems

21. Logistics/Distribution Mix
 Reliability of other firms in the process
 Legal restrictions
 Availability of finance
 The product being distributed
 The image associated with the product
 The stock management system being used
 The distribution capability of the
manufacturer

22. TASK
 RESEARCH LLOOGGIISSTTIICCSS
 Provide a description with advantages
and disadvantages for ROAD, SEA,
RAIL and AIR transportation