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Operations And Supply Chain Management
Found in: Page 287
Operations And Supply Chain Management

Operations And Supply Chain Management

Book edition 14th
Author(s) F. Robert Jacobs
Pages 800 pages
ISBN 9780078024023

Short Answer

Explain how having more work-in-process inventory can improve the efficiency of a process. How can this be bad?

Inventory, often known as stock, relates to the items as well as supplies that a company maintains for resale, manufacturing, or even use.

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Step by Step Solution

Inventory goods

Inventory relates to a firm's ready-to-sell items as well as commodities, as well as the materials utilized to manufacture goods. Stock may be divided into three categories: raw goods, work-in-progress, as well as completed items. Stock is classified as a current commodity since the corporation expects to sell the completed goods within the year.

The more work-in-process inventory can improve the efficiency of a process. This be bad

More stock of work-in-process can be utilized to buffer several step procedures. It can particularly aid in blockage or starvation. When a stage's operations should halt due to a lack of a suitable location to put the recently finished object, this is referred to as blocking. When a stage's operations should halt due to a lack of activity, this is referred to as starvation.

Buffer stocks among processes can assist alleviate these issues while also dramatically improving process efficiency. Raising work-in-process stock can be bad since it requires greater inventory investment as well as takes up precious floor area. Furthermore, the JIT mindset regards work-in-process as undesirable for a myriad of purposes.

Having a work-in-process stock assists in the elimination of procedures that restrict the firm's manufacturing of finished stocks. This is a procedure that ensures that there will be no deficits in the manufacturing process. Furthermore, when the stocks are filled, it prevents production from taking place. This means that the procedure can be paused for a short time before being resumed. However, if the client's requirement rises, the work-in-process stock will serve as a buffer.

Raising the work-in-progress inventories, however, indicates that the business will have a major investment trapped in the stock. The worth of the money will therefore be destroyed. It is also bad since it keeps too much stock, which raises the firm's operating expenses.

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