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level: Inventory Management

Questions and Answers List

level questions: Inventory Management

QuestionAnswer
what is under stockingWhen an organisation holds an insufficient amount of inventory to be able to carry out production/fulfil orders.
name consequences of under stockingThe organisation may be unable to continue with production, The organisation may be unable to accept an unexpected large order, Continually ordering new inventory can increase administration costs, The organisation is paying for workers who are not being productive, Missing out on bulk buying discounts as not purchasing in large quantities
what is overstockingWhen an organisation holds more inventory than it can use/sell.
name consequences of overstockingGoods may deteriorate before they are used/sold, Goods could become obsolete (no longer needed by the market) Higher storage/insurance/security costs. Money is tied up in the inventory that has been purchased, More storage space is required to hold the inventory, Higher chance of theft from the warehouse/store
describe manual record keepingWhere record keeping is done manually a bin card (or inventory card) may be used to record inventory received and issued. Bin cards record inventory coming in (received) inventory going out (issued) and a balance.
what is eposscanning barcodes/QR codes in the warehouse
what are spreadsheets used for in operationsusing software to hold the inventory information and also carry out calculations and analysis
what are security tags and CCTV used for in operationsto deter theft of inventory from both the warehouse and store
why use a computerized inventory management systemRecords will be more accurate compared to manual system, Inventory levels can be automatically updated, Inventory can be automatically ordered from your supplier, Easier to analyse the popularity of certain products
what is maximum inventory levelthe highest amount of inventory an organisation should hold before it incurs extra costs
what is minimum inventory levelthe lowest amount of inventory an organisation should hold below which they would become understocked
what is reorder levelthe point at which a new order is placed with the supplier
what is reorder quantitythe amount of inventory ordered from your supplier.