2.3.2a Interpreting bar graph stock charts and just in time stock control Quiz: Pearson Edexcel Business, Unit 8

The 20 questions

1. What is the main aim of just-in-time (JIT) stock control?

   • To hold very large stock levels so that the business is never short of goods
   • To buy all materials in one bulk order at the start of each year
   • To receive stock only as it is needed, so less money is tied up in inventory
   • To store finished goods in a warehouse until customers order them in bulk

2. On a bar chart of stock levels over time, what does the height of a bar show?

   • The number of customers who visited the shop that day
   • The quantity of stock held at a particular point in time
   • The total profit the business made in that month
   • The average price paid per unit to suppliers in that month

3. Stock levels on a bar chart are 300 units in January, 120 in February and 450 in March. In which month did stock fall the most, and by how much?

   • January, by 300 units from December
   • March, by 330 units from February
   • February, by 180 units from January
   • February, by 300 units from January

4. A café orders milk every morning rather than storing a month's supply. Which stock control method is it using?

   • Buffer stock control
   • Just-in-time (JIT) stock control
   • Periodic warehouse stock control
   • Bulk-buying stock control

5. Which is a key risk of just-in-time stock control?

   • Cash is tied up in unsold finished goods for many months at a time
   • Warehouse costs rise sharply because stock is held in very large quantities
   • Stock becomes out of date because it is held for too long before use
   • A late delivery can stop production because almost no reserve stock is held

6. Which cost does just-in-time stock control most directly reduce?

   • The corporation tax paid on the business's profits
   • The cost of advertising new products to customers
   • The cost of storing and holding stock
   • The wages paid to the business's directors

7. A business records stock levels of 80, 60, 90 and 40 units over four weeks. What was the average weekly stock held?

   • 70 units
   • 67 units
   • 65 units
   • 67.5 units

8. A business's stock chart shows a fall from 500 to 100 units in one month, while sales were steady. What is the most likely explanation?

   • The business moved to a new warehouse and stock was counted twice in the same month
   • The business decided to stop buying any products from suppliers for the whole of the month
   • Stock was used faster than it was replaced, perhaps because a delivery was late
   • Stock was sold to customers at twice the normal rate for that month, so the shelves emptied

9. Which is a benefit of holding buffer stock?

   • It means the business never has to pay suppliers for the goods it keeps in its warehouse
   • It removes the need to plan orders carefully at any point in the year for the business
   • It reduces the risk of stock becoming out of date before it is used by the business
   • It protects production if a supplier delivers late or demand rises unexpectedly

10. Why does a just-in-time system depend heavily on reliable suppliers?

    • Suppliers must agree to fix the price of every product for a period of ten years or more
    • Deliveries must arrive on time because very little stock is held in reserve
    • Suppliers must hold all the stock the business will need for the whole year in advance
    • Suppliers must always be located in the same country as the business that buys from them

11. A bakery holds two days of flour and deliveries arrive each morning. Which factor makes JIT easiest for the bakery to manage?

    • Suppliers that only accept orders placed a full year in advance
    • Suppliers located on the other side of the world with slow shipping
    • Suppliers that only deliver once every three months in bulk
    • Suppliers that deliver quickly, reliably and in small amounts

12. Evaluate whether just-in-time stock control suits a business that sells seasonal goods. Which point is most relevant?

    • JIT means seasonal goods should be bought in bulk well before the season begins each year
    • JIT suits seasonal goods because demand stays the same from one season to the next
    • JIT removes the need to forecast demand, which seasonal businesses rarely find useful at all
    • JIT works best when demand is predictable and suppliers can respond quickly to changes

13. What does a stock level measure?

    • The amount of money a business owes to its suppliers for goods bought on credit each month
    • The total value of all the sales made by a business during the course of one full year
    • The number of employees who work in the warehouse and handle deliveries each working day
    • The quantity of goods held by a business at a particular point in time

14. A business starts the month with 200 units of stock, buys 150 units and ends the month with 90 units. How many units were used or sold?

    • 240 units
    • 110 units
    • 350 units
    • 260 units

15. Which product would a business most sensibly keep at low stock levels under a JIT system?

    • Packaging materials that are cheap and widely available
    • Tinned food that can be stored safely for several years
    • Fresh food with a very short shelf life
    • Spare parts for machines that are rarely needed

16. Which is a disadvantage of holding large stock levels?

    • The business is forced to close its doors for the year
    • Customers are unable to buy goods from the business
    • Suppliers stop accepting orders from the business
    • Money is tied up and storage costs rise

17. A stock chart shows falling stock every week for six weeks. Which action should the manager take next?

    • Remove the stock chart because falling stock is never a concern
    • Stop placing any orders so the stock falls to zero
    • Double the price of every product to reduce the sales rate
    • Place a reorder before stock reaches the minimum level

18. A JIT business has supplier delivery times that vary from one to five days. What is the most sensible response?

    • Raise prices so that customers accept longer waiting times
    • Hold some safety stock or find more reliable suppliers
    • Ignore the delays because the delivery times will average out
    • Stop using JIT and buy stock for ten years in advance

19. What is buffer stock?

    • Stock that is delivered to customers at the same time as the order
    • Extra stock held to cover unexpected demand or late deliveries
    • Stock that is only purchased after a customer has paid in full
    • Stock that a business has been unable to sell for over a year

20. Explain how just-in-time stock control can improve a business's cash flow.

    • Less money is spent on stock that would otherwise sit unsold in storage
    • Suppliers give free stock to any business that uses JIT, which saves cash on every order
    • Cash is kept in the warehouse rather than in the bank account, which speeds up payments
    • Stock is paid for before it is ordered, so cash flows into the business earlier than before

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