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SCM 300 Exam 1 Module 2.
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SCM 300 Exam 1 Module 2.
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SCM 300 Exam 1 Module 2Inventory - CORRECT ANSWER-"The items that are owned by a company for
the purpose of present or future sale or for use in day-to-day operations."
Lead time - CORRECT ANSWER-"The period of time between when an order is
placed and when the order is received.
Lot Size - CORRECT ANSWER-"An accepted order size. (Sometimes also refers
to a possible order size increment. Example: Lot size of 100 units. Ordering 100,
200, 300, etc. would be possible order sizes.)"
Inventory Risks - CORRECT ANSWER-"Carrying inventory can come at a hefty
price, thus there is risk. Not carrying inventory also comes at a risk: the risk of not
having inventory, the risk of not being able to satisfy the needs of the customer."
"Company risks: Theft or damage to inventory, late shipments from supplier,
employee sickness, employee strike, machine malfunctions, harsh weather
Supplier risks: Employee sickness or strikes, sudden increases in demand for
your company's supplies, the risks posed by their suppliers
Customer risks: Sudden increase in demand, damage to customer's inventory"
Demand Forecasting - CORRECT ANSWER-"A predictive analysis and/or
estimation of consumer demand in a future period"
SKU - CORRECT ANSWER-"A specific product or service's identification code
used to track inventory or catalog sales."
Independent vs Dependent Demand - CORRECT ANSWER-"Independent
demand item: An item for which demand levels are not directly impacted by the
demand of another related item.
Dependent demand item: An item for which demand levels are directly impacted
by the demand of another related item."
All 8 Inventory Classifications - CORRECT ANSWER-"Raw Materials - Typically
refers to material, parts, or components that will be used to create an end item or
,service. These materials have not yet begun their manufacturing/transformation
into a finished good or service. (Examples: unassembled handles, shafts, and
shovel blades)
Work-in-Process (WIP) - Items that have begun the manufacturing process but
are not yet completed. (Example: Partially assembled shovels)
Finished Goods (FG) - Items that are completed and ready for shipment at a
manufacturing facility or assembly plant. (Example: Fully assembled shovels)
Maintenance, Repair, and Operations (MRO) - Items that are not intended as part
of the finished goods but are important to the daily operations of the company.
(Examples: Desks, computers, cleaning supplies, oil/lubricants, factory
equipment)
Market Inventory - Inventory that is readily available on the shelf. (Example:
Shovels on the shelf of Home Depot)
Safety Stock (buffer stock) - Inventory kept to account for variation/uncertainty of
demand. (Example: 100 shovels are sold per week Sunday to Saturday.
Shipments arrive Sunday morning. Stores always wants to start Sunday with 125
units of inventory. The additional 25 units are safety stock)
Anticipation Inventory - Inventory that is created and stored for future use.
Typically used to absorb uneven rates "of demand that may be related to
seasonal demand or planned price reductions. (Example: Shovels assembled in
summer and stored through fall in anticipation of large winter demand would be
classified as anticipation inventory.)
Pipeline Inventory - Inventory in transit between two points. Those two points
establish the pipeline. So the inventory does not necessarily need to be on a
truck or train."
High vs. Low Inventory - CORRECT ANSWER-"Pros of High Inventory Levels
, Higher levels of customer service - Having inventory will help a company address
their immediate demand for product
Quantity discounts may be possible - Lower per unit costs
Fewer orders will need to be placed - Possibly lower ordering costs and
transportation costs
Greater security against unexpected demand variability
Pros of Low Inventory Levels
Less storage space required - Costs of holding inventory may be lower
Lower chance of inventory obsolescence and shrinkage
Less inventory typically means less materials handling requirements
Less money invested in inventory means more money available for other
investment opportunities
"
All 4 Costs of Inventory - CORRECT ANSWER-"Cost to Purchase - The cost to
purchase the inventory.
Holding Cost - The cost of holding the inventory. Some of the costs this may
include are: Rent for the storage facility, energy and equipment required to keep
inventory in an acceptable environment, insurance, security personnel,
employees that handle inventory, etc.
Ordering Cost - The costs associated with placing an order for inventory. This
might include the cost to research suppliers, negotiate purchase, the cost to have
items shipped, and the upkeep of any electronic ordering system.
Stockout Cost - The costs associated with not having enough inventory on hand
to meet customer demand. This might include loss of the unmet sale in the
present, the loss of any future sales from this customers, cost of expedited
shipment, and the cost of altering operational plans to expedite production"
Inventory Calculations - CORRECT ANSWER-"Average amount of inventory =
Q/2"
"Number of orders per year = D/Q"
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