Inventory
Business Management: IB Diploma, topic 5.4.5
Inventory
An inventory is a list of all the stock that is held by a business.
Influences on amount of inventory held
- A business must consider several influences on the amount of inventory held:
- Inventory control charts can be used to show a business its maximum stock level, re-order level, lead time and buffer stock.
Inventory Control Diagram
- An inventory control diagram shows the maximum stock level that a business is willing to operate at.
- An inventory control diagram shows the re-order level which is the point at which further stock is ordered.
- An inventory control chart shows the buffer stock which is the spare stock a business holds in case there is an unexpected increase in demand.
- An inventory control chart shows the lead time which is the time taken for the stock to arrive after it is ordered.
Inventory Control Diagram
Test yourself on Inventory
What does buffer stock mean?