Fixed reorder level- placing an order for stock after reaching a fixedamount of stock
Two bin system – dividing stock into two bins when one is empty thenorder for new and use second one.
Buffer stock- minimum stock level to meet unforeseen demand and to cover break in supplies.
Lead time – the time between the order and delivery of goods.
Stock pile - keeping the stock level which will fulfill demand till next few monthson any special event like Eid.(See figure 23.3 on page 361)
Just in Time (JIT) stock control
A stock control system which is designed to minimized the costs of holding stocks in raw material, work in process and finished goods by very carefully planned scheduling and flow of resources through the production process.
It requires no buffer stock, just order raw material when you need, anddelivered finished goods as soon as they are completed.
It requires a very efficient ordering system and delivery reliability.
Important Requirement for JIT
Excellent relationship with suppliers and employees
Multi skilled production staff
“Lean production is an approach to operations management aimed at reducing thequantity of resources used up in production”.
Key Features of Lean Production
Simultaneous engineering instead Sequential engineering – all necessaryactivities should start at same time instead of one after another or in sequence.This approach will increase the speed of work.
Flexibility – to handle technological advances and changing consumer tastes there should be flexibility in these three areas;
Flexible employment contracts – allows to change in workforceaccording to the change in demand.
Flexible machinery – that can be quickly change from one designto another.
Multi skills worker
Kaizen –continues improvement
Kaizen is a Japanese term meaning continues improvement in productivity.It is difficult to look for continuous improvement all the time. Japanese tried to solvethis problem by introducing PDCA (plan, do check action) cycle. It is a series of activities that lead to improvement.
Plan- business must identify that where improvement is needed. Data must begathered and used to develop a plan which will result in improvement.
Do – the plan should be implemented by workers, on the production line
Check – check whether or not there has been an improvement. This task may be carried out by inspectors.
Action – if plan has been successful, it must be introduced in all parts of the business.
Conditions necessary for Kaizen