Learning objectives
Explain why businesses hold raw materials, work-in-progress and finished goods and weigh the costs of holding inventory against the benefits.
Interpret an inventory control chart showing the maximum level, buffer inventory, re-order level, re-order quantity and lead time.
Calculate a re-order level from daily usage, lead time and buffer inventory.
Compare just-in-time with just-in-case inventory management and analyse the impact of adopting JIT on costs, cash flow and risk.
Explain the importance of supply chain management in coordinating suppliers, production and distribution.
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