Inventory Terminology and Techniques

1.The four categories of inventory are:

Hint: See the Overview: Managing Inventories section of the week 1 PowerPoint deck (page 9-16)

A. Stock Outs, ABC, Economic Order Quantity, and Finished Goods

B. Finished Goods, Assembly Process, Maintenance Parts & Supplies, Raw Materials.

C. Work-in-Process, Maintenance parts and Supplies, Finished Goods, and Raw Materials

D. Equipment on Manufacturing Line, Work-in-Process, Maintenance Parts and Supplies, Raw Materials

2.The inventory dilemma is the balance between customer desires and minimizing the cost of inventory.

Hint: See the Inventory Basics section of your lecture.
True
False

3.Assume your business uses the Min/Max Inventory Reorder Strategy. In other words, inventory is ordered when a minimum quantity is reached.

You stock widgets for sale. The maximum number of widgets is 1000. The minimum is 200. The lead-time is one week. The cost of the widget is $10.00.

Today you discovered that a large shipment reduced your inventory to 200. How many widgets do you order?

Hint: See page 34-35 in the week 1 PowerPoint______________.

4.There are multiple strategies for reordering inventory. The following statements are all related to Inventory Reorder Strategies.

(Hint: See page 24-30 of the PowerPoint file in Week 1)

1. When using the Order Point Strategy, the quantity ordered is based on __________

2. Inventory is ordered when a __________ quantity is reached that brings it back to the ___________ .

3. ____________ says that you order the number of units that sold as they sell. This requires accurate forecasts and a robust supply chain.

5.How do you decide to reorder your inventory?

Order Point [ Choose ] The time between placing an order and delivery of the goods. The time between placing one set of orders and the next set of orders . Inventory held as a buffer against variability in demand, delivery time, or other unforeseen actions . Inventory level used to trigger a reorder

Safety Stock [ Choose ] The time between placing an order and delivery of the goods . The time between placing one set of orders and the next set of orders . Inventory held as a buffer against variability in demand, delivery time, or other unforeseen actions. Inventory level used to trigger a reorder

Lead Time [ Choose ] The time between placing an order and delivery of the goods . The time between placing one set of orders and the next set of orders. Inventory held as a buffer against variability in demand, delivery time, or other unforeseen actions. Inventory level used to trigger a reorder

Order Cycle Time [ Choose ] The time between placing an order and delivery of the goods. The time between placing one set of orders and the next set of orders. Inventory held as a buffer against variability in demand, delivery time, or other unforeseen actions . Inventory level used to trigger a reorder .