9609 · 4.2.1
Managing inventory
**Managing inventory** (4.2.1) leads to **4.2.2 JIT**. In evaluation, **quantify**: holding $X stock vs cost of one stock-out stopping a production line.
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).