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SCM 300 Exam 1 Module 2 Questions and Answers
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SCM 300 Exam 1 Module 2 Questions and Answers
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SCM 300 Exam 1 Module 2 Questionsand Answers
Inventory - 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 - Answer -"The period of time between when an order is placed and when the
order is received.
Lot Size - 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 - 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 - Answer -"A predictive analysis and/or estimation of consumer
demand in a future period"
SKU - Answer -"A specific product or service's identification code used to track
inventory or catalog sales."
Independent vs Dependent Demand - 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 - 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 - 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
"
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