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Resource Management

Stock control

  • 5 things to know
  • Paper 2 and Paper 3

Overview

Stock control diagrams, buffer stock, reorder levels and lead times, the costs of poor stock control, just in time management and its risks, and waste minimisation and lean production as sources of competitive advantage.

What you need to know

Answer each one before you reveal it.

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Key term

What is buffer stock, and what is the reorder quantity?

Evaluation

What are the risks of holding too much or too little stock?

Key term

What is just in time stock management, what are its benefits, and what does it demand of suppliers?

Evaluation

What are the benefits of waste minimisation for a business?

Evaluation

How does lean production create competitive advantage through quality?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What pattern does a stock control diagram typically display, and what does this pattern represent?

    Model answer

    A sawtooth pattern, showing stock levels declining as stock is used, an order being placed at the reorder level, and stock rising sharply when the delivery arrives after the lead time.

  2. 2

    Define maximum stock level.

    Model answer

    The highest amount of stock a business will hold, limited by storage capacity and costs.

  3. 3

    What is the reorder level in stock control?

    Model answer

    The stock level at which a new order is placed with suppliers.

  4. 4

    Define lead time in the context of stock management.

    Model answer

    The period between placing an order and receiving the stock.

  5. 5

    Why does the reorder level need to account for lead time?

    Model answer

    Stock must be ordered early enough so that new stock arrives before existing stock runs out, preventing stockouts during the lead time period.

  6. 6

    What is meant by reorder quantity?

    Model answer

    The amount of stock ordered each time the reorder level is reached.

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