PODAR INTERNATIONAL SCHOOL
Production planning
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Supply Chain management [SCM]: supply chain mgt (or logistics) refers to the sequence of
activities from the production of a good or service to it being delivered to the end customer.
Supply chain management (SCM) is the art of managing and controlling these logistics, which
must be efficient and cost effective for a business to be profitable.
What are the functions of SCM ?
Explain JIT and JIC?
What does stock/ inventories comprises of?
STOCK CONTROL CHART
Concepts :
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Maximum stock level - This is the upper limit of stock that a business wishes to hold,
determined partly by the physical storage space that is available and the level of demand for
output, per period of time.
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Minimum stock level (or buflfer stock) - This is the lowest amount of inventory that a
business wishes to hold. Buffer stocks are held as a precautionary measure against any
unexpected events, such as late deliveries or a sudden increase in demand. The more
efficient the firm, the lower buffer stocks tend to be.
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Re-order level – There is a time lag between a firm placing an order for stocks and it being
delivered. Hence, when inventories fall to the re-order level, an order is placed. This helps to
ensure that the order arrives just before stocks fall below the pre-set minimum level.
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Re-order quantity - This is the amount of new stock ordered.
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Lead time - This measures the time lag between placing an order and receiving the stocks.
The greater the lead time, the higher the buffer stock level needs to be. Delays can prolong
lead times so stock levels go below the desired minimum level, so it is important to have
sufficient buffer stocks to deal with unforeseen situations.
PODAR INTERNATIONAL SCHOOL
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Find using above chart the below :
Buffer stock =
Lead time as seen above are represented as =
Re order quantity =
Re order level=
Maximum level =
What are the factors that influence the amount of stock a business holds and orders ?