Describe the features of an effective inventory management system.
- Scottish Highers Business Management - Question c - 2019
Question c
Describe the features of an effective inventory management system.
Worked Solution & Example Answer:Describe the features of an effective inventory management system.
- Scottish Highers Business Management - Question c - 2019
Step 1
maximum inventory level
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Answer
An effective inventory management system maintains a maximum inventory level to prevent excess stock, which can tie up capital and increase storage costs.
Step 2
minimum inventory level
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Answer
It establishes a minimum inventory level to ensure products are available for customer demand while minimizing holding costs.
Step 3
re-order level
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Answer
The system defines a re-order level, which triggers the replenishment of stock before it runs out, preventing shortages.
Step 4
accurate tracking and forecasting
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Answer
Effective systems utilize accurate tracking mechanisms and forecasting tools, enabling timely decisions about restocking and resource allocation.
Step 5
appropriate storage conditions
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Answer
They ensure suitable storage conditions, such as temperature control and proper shelving, to maintain the quality of the inventory.
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