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Making Operational Decisions

Working with suppliers

  • 3 things to know
  • Paper 2

Overview

Bar gate stock graphs, buffer stock, reorder levels, lead times and reorder quantities with worked examples, just in time stock control, procurement and logistics.

What you need to know

Answer each one before you reveal it.

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Key term

What does a bar gate stock graph show, and what is buffer stock?

Key term

What is a bar gate stock graph?

Key term

What is buffer stock?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is a bar gate stock graph?

    Model answer

    A bar gate stock graph shows how a business's stock level changes over time. Stock falls as it is used and jumps back to the maximum level when a delivery arrives.

  2. 2

    What is buffer stock?

    Model answer

    Buffer stock is the minimum stock kept in reserve in case of late deliveries or a rise in demand. Stock should never fall below this level.

  3. 3

    What is the maximum stock level?

    Model answer

    The maximum stock level is the most stock a business wants to hold at any one time. Holding more would raise storage costs and the risk of waste.

  4. 4

    What is the reorder level?

    Model answer

    The reorder level is the stock level at which a new order is placed with the supplier. The reorder level allows for stock used during the lead time.

  5. 5

    What is lead time?

    Model answer

    Lead time is the time between placing an order and the stock arriving. A longer lead time needs a higher reorder level.

  6. 6

    What is the reorder quantity?

    Model answer

    The reorder quantity is the amount of stock ordered each time. The reorder quantity usually equals the maximum stock level minus the buffer stock.

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