IB BM HL 5.6.3 Stock Control Charts

[Maximum number: 8]

Fair Coffee (FC)
David is about to open a small coffee shop, Fair Coffee (FC), at a central city location. On opening day FC will have a stock level of 500 kg of coffee beans. David estimates that the coffee beans will be used at a constant rate for the first six months of operation.
David's planned stock management figures for the coffee beans are shown below:

Table for Question IB Business Management HL 5.6.3 Hl Stock Control Charts Questions question 1 — IB Business Management HL

Lead time for delivery of the coffee beans: 1 month.

(a)

Using the information in the table, construct a fully labelled stock control chart for FC, for the first six months of operation.

[ 4 ]

(b)

A delivery of coffee beans was 1 month late, arriving on the last day of the seventh month rather than the last day of the sixth month. Using figures from the chart you constructed in part (b), explain the effects of:

A delivery of coffee beans was 1 month late, arriving on the last day of the seventh month rather than the last day of the sixth month. Using the stock management figures above, explain the effects of:

[ 4 ]

(i)

the late delivery on FC's stock level and;

[ 2 ]

(ii)

the late arrival delivering only 75 kg of coffee.

[ 2 ]

- The late arrival of only 75 kg , a lower quantity than normally ordered, on the last day of the seventh month will mean that David's stock of beans will be $\mathbf{5 0 + 7 5 = 1 2 5 ~ k g}$ , still below the 200 kg of the desired buffer/minimum stock level [1].
- Assuming the same level of consumption, FC will run out of stock and will not be able to supply all of its customers next month (the exact day is not required) [1].

Do not penalize candidates that use the correct figures without explicit use of the chart.
N.B. award a maximum of [1] if the answer is added to the chart drawn in part (b) and there is no explanation.

Award a maximum of [1] if there is no figure to support the explanation.
Award a maximum of [1] if the answer does not address the late arrival issue.

IB Business Management HL 5.6.3 Hl Stock Control Charts Questions question 1

Question (a)

Question (b)

Question (i)

Question (ii)