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Operations Management
Quick questions on Supply chain and inventory management explained: H2 Management of Business
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the supply chain?Show answer
The supply chain is the network through which materials flow from raw-material suppliers, through the firm's operations, to the final customer. Managing it well means getting the right inputs, in the right quantity and quality, at the right time and cost. Two big decisions dominate: who to source from (supplier selection) and how much stock to hold (inventory management).
What is supplier selection?Show answer
Choosing suppliers involves trading off price, quality, reliability, lead time, flexibility and ethics. A cheap supplier that is unreliable or low quality can be costly overall (stockouts, defects, reputational risk). Firms also choose between single sourcing (one supplier - simpler, possible discounts and close relationship, but vulnerable if it fails) and dual or multiple sourcing (more resilient and competitive, but more complex). Building strong supplier relationships and managing supplier risk are increasingly central.
What is inventory (stock) management?Show answer
Inventory includes raw materials, work-in-progress and finished goods. Holding stock has a clear trade-off:
What is q1?Show answer
State two costs of holding high levels of inventory. [2 marks]
What is q2?Show answer
Explain one benefit and one risk of a just-in-time inventory system. [4 marks]
What is q3?Show answer
Analyse why a firm might choose dual sourcing despite the extra complexity. [6 marks]
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