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Stock control - numerical questions


You are advised to sketch the saw-toothed chart for this series of questions, and then follow each change and action on it.

Question 1

A firm holds stocks of car tyres for supply to the retail trade in its area. It is the main local agent for Synthetic Tyres of Japan. It aims to hold a minimum stock of 1,500 sets of tyres and a maximum holding of 10,500 sets. It expects to sell 3,000 sets each week. If it reorders tyres when its stocks fall to 7,500 what is the delivery time and quantity for tyres from the sole importer of Synthetic Tyres of Japan?

Question 2

After 4 weeks, when all activities were as planned, sales increase to 4,000 sets per week. What effect will this change have on the company at the end of the 6th week?

Question 3

Sales stay at 4,000 sets per week. What changes will the firm have to make at the stage of the next reorder to get its maximum stock level back on plan?

Question 4

What further changes does the firm need to make to get back to a minimum stock level of 1,500 sets of tyres?

Question 5

The firm has operated in this way for the last two cycles. First (a) list three possible effects on stocks and stock levels of the firm being able to reduce the delivery time of an order from 2 to 1 week then (b) fully explain one of them.