39 Stock Control

What is the primary objective of effective stock control?

• To maximise storage space.

• To minimise costs associated with holding and ordering stock whilst meeting demand.

• To increase sales revenue by always having surplus stock.

• To automate the entire supply chain process.

Which of the following is a potential cost associated with *holding* too much stock?

• Loss of customer goodwill due to stockouts.
• Increased opportunity cost.
• Higher ordering costs.
• Discounts for bulk purchases.

What does the reorder level in stock control refer to?

• The maximum amount of stock a business can hold.
• The minimum quantity of stock allowed before an order is placed.
• The level of stock at which a new order should be placed to replenish inventory.
• The amount of stock sold in a given period.

Which inventory management system involves ordering a fixed quantity of items when stock reaches a specific reorder point?

• Just-In-Time (JIT).
• Economic Order Quantity (EOQ).
• Fixed-Order Quantity System.
• Fixed-Period System.

What is a key disadvantage of holding too little stock?

• Increased storage costs.
• Higher administrative costs for managing inventory.
• Risk of stockouts and lost sales.
• Increased opportunity for obsolescence.

Which of the following is a benefit of implementing a Just-In-Time (JIT) stock control system?

• Large buffer stock to prevent disruptions.
• Reduced risk of stockouts for popular items.
• Lower inventory holding costs.
• Increased flexibility in production scheduling.

What is buffer stock?

• Stock held for promotional purposes.
• The amount of stock on order but not yet received.
• An extra quantity of inventory kept on hand to prevent stockouts due to unexpected demand or supply variations.
• Stock that has become obsolete and needs to be disposed of.

In the context of stock control, what does "lead time" refer to?

• The time it takes to sell all existing stock.
• The period between placing an order and receiving the goods.
• The duration of a business accounting period.
• The time spent by employees managing inventory records.

Which method of stock valuation assumes that the first units of inventory purchased are the first ones sold?

• Last-In, First-Out (LIFO).
• Weighted Average Cost (WAC).
• First-In, First-Out (FIFO).
• Specific Identification.

What is the Economic Order Quantity (EOQ)?

• The maximum amount of stock a business can store.
• The minimum stock level to avoid obsolescence.
• The optimal order quantity that minimises the total cost of holding and ordering inventory.
• The amount of stock needed for emergency situations only.