Management In A Manufacturing Company

Price nut Carter (2005) further stressed that the stock controls system is responsible for the correct establishment of stock levels for every item held in the store when these levels are being established certain basic operational factors have to be considered and then reflected in the final stock figure. These as follows:
i.    Storage capacity: This is the amount that can be held will be restricted by the actual physical capacity of the stores. Operation in sonar cases where a special store is needed e.g. chemical explosives then the actual space available to store wilt be strictly limited by he capacity of the store.
ii.    Capital Availability: This is important when establishing the level of stock held if funds arc out available to finance the stock level established first it will have to be reduced.
iii.    Operational used: This is the amount of stock needed by production, ales, distribution, maintenance and other department over a certain period of time e.g. weekly or monthly the figures will be affected by overall sales and demand fore cast.
iv.    Delivery period: relates to the time taken for the supplier to produces dispatch and transport goods needed to the store. The time period wilt affect the level of stock needed to be held sufficient stock has to be purchased to last between one delivery and the next The delivery period will depend on several factors which include. Are they exstocks’, Are the goods imported?, Do they have to be produced from the original specification’ Or how far with the goods have to be transported?
v.     Buffer stock: This refers to the extra stock a store holds to cover any unforeseen holdup in delivery or sudden change in demand.
The buffer stock will very in size depending on how reliable delivers are and on the operational risk involved. In many organization 25% of the minimum stock level is regarded as being art adequate buffer or emergency stock Tooley (2001).
The quantity and time to order is determined by a number of stock control levels. Therefore a stock control level is a predeterminant quantity of stock to be held when stock at hand fails to this predetermined quantity or stock level, certain action is taken for example when stock on hand falls to the re-order level a fresh order for a fixed or variable quantity is placed the supplier various stock levels include.
a.    Minimum Stock: it may be necessary to hold to avoid stocks out or buffer stock to meet unexpected high demand Buffer stock should be only required from time to time during the lead time between re-ordering fresh quantity of an item or their resupply if there is excess demand or delay ion re supping the buffer stock may be used.
    b.    Maximum level: This is a stock calculated as the maximum desirable which is used as an indicator for management to show when stocks have rising too high.
c.    Re-order level: The level of stock usually free stock at which a further replenishment order should be placed. The re-order level is dependent on the lead time and the rate of demand during the lead time.
d.    Progress Time: This is the When the stock on hand fail to this level, a stock should he made with the supplier as to the status of the outstanding orders.
2.9.2    Economic order Quantity
The economic order quantity is a mathematical formula, used by many organization to establish the most economic amount to order for any item held in stock. To be able to derive at an EOQ, the following hinges on assumptions should be included.
1.    That the holding cost is totally variable
2.     That there are no physical storage constraints
3.     There are no quantity discounts
4.     All cost and as manual quantity arc known with certain
5.     Delivery arrives in time and stocked out are not allowed.