JIC stock system

Created by: sian
Created on: 07-02-18 09:51


	JIC stock system
	Advantages There is flexibility to meet sudden and unexpected rises in customer demand. It enables production to continue for a while if there is a delay in supplies. Customer satisifaction is maintained as production does not have to wait for materials to arrive, shortening the lead time. Firms can benefit from economies of scale eg cost saving through bulk buying.	Disadvantages Suppliers can charge premium prices for urgent deliveries of stocks. Higher stock holding costs are incurred eg storage, maintenance, security and insurance There is a risk of wastage through stock obsolescence and unsold goods Liquidity issues may arise as JIC requires large amounts of working capital to be tied up in stock, this has consequences eg raising additional sources of finance
	Evaluation Definition - JIC is a stock control system that relies on having spare stocks so that output can be raised immediately in the event of sudden or unexpected demand.A JIC system is designed to have a reserve (buffer) stock level. Other costs associated with JIC can include insurance, maintenance and security to prevent damage and or theft. It ensures that the firm has sufficient amounts of inventory to meet the demands of customers whenever required. JIC is suitable for stocks that are not perishable. It is less suitable for perishable goods eg food, flowers as they may go off before they can be sold and their value realized. It is not suitable for industries where consumer tastes are very variable eg fashion.

JIC stock system

Advantages

There is flexibility to meet sudden and unexpected rises in customer demand.
It enables production to continue for a while if there is a delay in supplies.
Customer satisifaction is maintained as production does not have to wait for materials to arrive, shortening the lead time.
Firms can benefit from economies of scale eg cost saving through bulk buying.

Disadvantages

Suppliers can charge premium prices for urgent deliveries of stocks.
Higher stock holding costs are incurred eg storage, maintenance, security and insurance
There is a risk of wastage through stock obsolescence and unsold goods
Liquidity issues may arise as JIC requires large amounts of working capital to be tied up in stock, this has consequences eg raising additional sources of finance

Evaluation

Definition - JIC is a stock control system that relies on having spare stocks so that output can be raised immediately in the event of sudden or unexpected demand.A JIC system is designed to have a reserve (buffer) stock level. Other costs associated with JIC can include insurance, maintenance and security to prevent damage and or theft. It ensures that the firm has sufficient amounts of inventory to meet the demands of customers whenever required. JIC is suitable for stocks that are not perishable. It is less suitable for perishable goods eg food, flowers as they may go off before they can be sold and their value realized. It is not suitable for industries where consumer tastes are very variable eg fashion.

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JIC stock system

JIC stock system

Advantages

Disadvantages

Evaluation

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