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2.4.3 Stock Control - Coggle Diagram
2.4.3 Stock Control
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Stock control diagrams
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Lead time - the time it takes for stock to arrive after ordering it from the supplier. The longer the lead time the more buffer stock needed.
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Poor stock control
High stock in costs - costs associated with holding to much stock. Bad for small businesses with little money
High stock out costs - costs associated with running out of stock. eg running out of raw mats means production would have to stop but workers + expenses would still need to be paid.
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Buffer stock
Pros
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Economies of scale achieved through bulk buying stock so more buffer stock will mean lower unit costs.
Cons
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Capital tied up in stock is unproductive, opportunity cost with this cash, that could be used elsewhere.
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