Please enable JavaScript.
Coggle requires JavaScript to display documents.
Stock Control (Types of stock (WIP (Unfinished goods) (A product that is…
Stock Control
-
Buffer stocks
Buffer stock level is the extra stock level maintained by firms to mitigate risk of stock shortfall in uncertain times of supply and demand
Its purpose is to prevent problems in supply if there is a sudden influx in demand for the product, so the company will not be rendered unable to sell more stock
Pros & Cons
Pros include: Ability to meet increased demand, No lead time and lower unit prices due to economies of scale
Cons include: Reduced storage space, risk of deterioration, damage or theft, ties up money in unsold stock that could be reinvested elsewhere and the fact that if trends change you cannot adapt as you have the 'not in fashion' stock.
JustInTime Method
JustInTime is a lean production method which includes ordering stock to meet the demand that already exists, instead of preempting demand and ordering bulk.
-
Pros & Cons
Pros include: Low storage space taken up, easy flexibility to adapt to trends, complete clearance of all stock (no wastage) and quick movement of perishable goods
Cons include: Cannot meet influx in demand, delays in lead time can be detrimental and higher unit costs
Diagrams
This diagram shows a typical firms stock level management, normally using JIT method as many are in current times
-
-
If good stock control is maintained, companies can preempt increases in demand and meet them, as well as minimising wastage because they will know exactly how much to buy and how much to keep to stay afloat
