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Formulas of CTB and CTM
CTB = P × Q
CTM = FC + (VC × Q)
Diadvantage of CTM and CTB
It ignores qulitative data that may influence on the decision.making process. Factros that influence the supply chain.
CTB= Ou......?
Outsource
Definition of JIC. It is a traditional method
It is a traditional method of stock control which involves holding a reserve (stock) of raw materials and finished products in case of a sudden increase in demand.
Definition of JIT. It is a modern method of...
It is a modern method of stock control which involves
getting supplies only when necessary and producing only when an
order is made.
Stock is only brought when required.The aim is to hold low (even zero) levels of stock.
JIT
Stock is brought in and stored with a reserve
(the buffer stock) in case it is needed.
JIC
Benefcial for the working capital – the
business can use its money for its day-to-
day activities.
JIT
Reduces pressure on the cash flow.
JIC
Reduces costs (storage and wastage).
JIT
Reduces costs (by buying in bulk: (economies of scale).
JIC
Reduces the chance of holding stock that
cannot be sold (eg obsolescent stock).
JIT
It means it is possible to meet sudden
changes in demand.
JIC
Mless chance of damaged or
ruined stock.
JIT
Provides spare parts.
JIC
Creates more space for alternative
production plans.
JIT
Means that all stock is stored ready to
use.There is no delivery issue and no waiting
time for customers.
JIC
Creates a closer relationship with
suppliers (they may need to run it too).
JIT
Suppliers will not
charge a premium price.
JIC
Why is JIC more costly than JIT?
--It carries the risk of waste (obsolete products).
--Labor and storage expenses need to be accounted for.
Disadvantages of JIT
--Dependency on Suppliers.
--Increased Vulnerability to Changes: there is nothing to answer with (minimal stock).
Why does JIC result in a reduced cash flow?
The funds tied up in excess inventory could be used elsewhere in the business
Why does JIT can't withstand Any unforseen disruption?
Tightly coordinated supply chain. change= changes in plans again.