9609 · 4.2.1
Managing inventory
9609 AS — stock types, holding costs, reorder levels, buffer stock, and stock-out risk.
Need to know
What you need to know
- Inventory exists in three forms: raw materials, work-in-progress (WIP), and finished goods.
- Holding stock allows a business to satisfy customer orders promptly.
- It provides a buffer against supply chain delays or unexpected surges in demand.
- Bulk buying stock can lead to lower unit costs from suppliers (purchasing economies of scale).
Explanation
Managing inventory
- Inventory exists in three forms: raw materials, work-in-progress (WIP), and finished goods.
- Holding stock allows a business to satisfy customer orders promptly.
- It provides a buffer against supply chain delays or unexpected surges in demand.
- Bulk buying stock can lead to lower unit costs from suppliers (purchasing economies of scale).