BUFFER INVENTORY – EFFICIENT USE OF INVENTORY / STOCK BUSINESS STUDIES

e)
a)

c)

f)

g)

d)

b)

Time (Weeks) Stock Units Held (Quantity) Buffer Stock Lead Time

Minimum stock level allowed Maximum Level of stock allowed (storage capacity) Reorder Level

1. What is a buffer inventory?

2. What method of production would have low levels or zero buffer inventory? Just in time or just in case?
Explain your answer.

3. Why would a manager choose to have low levels or no buffer inventory at all? What are the advantages?

4. Explain ‘lead time’ and give an example.