BUSMGT Chapter 20: Inventory management
"C" items typically account for ____________________% of the items, but only account for a very small percentage of the inventory cost.
50
The _______________________ inventory classification scheme divides inventory items into three groupings: high dollar volume, moderate dollar volume, and low dollar volume.
ABC
Fixed-time period model (P-model)
An inventory control model that specifies inventory is ordered at the end of a predetermined time period. The interval of time between orders is fixed and the order quantity varies.
Fixed order quantity model (Q-model)
An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory.
Single-period problem
Answers the question of how much to orderwhen an item is purchased only one time and it is expected that it will be used and not reordered
__________________ is a physical inventory-taking technique in which inventory is counted frequently, often times on a time-based schedule.
Cycle counting
Select all that apply Which of the following affect safety stock levels in a fixed-order quantity model? Check all that apply. Lead time in days Reorder point in units Desired service level Standard deviation of usage during lead time
Desired service level Standard deviation of usage during lead time
____________________inventory includes in-transit items or at a warehouse ready for shipment to the customer.
Distribution
Demand is characterized as independent if it comes from sources_________________ to the firm and is not related to other __________________.
External, outside, or foreign products, parts, inventory, or items
Which of the following is considered to be warehouse inventory? Work-in-process inventory Finished goods inventory in a distribution center Inventory at a vendor's facility awaiting shipment Raw material inventory awaiting a machining operation
Finished goods inventory in a distribution center
Which model is more likely to have a stock out? Fixed-time period Fixed-order quantity system Both are equally likely, depending on the desired service level used
Fixed-time period
An _________________ ________________system provides the organizational structure and the operating policies for maintaining and controlling goods to be stocked.
Inventory control
A key financial ratio directly tied to inventory is called? Earnings per share Debt ratio Inventory turns Cost of goods sold
Inventory turns
Which of the following indicates when the inventory position drops to the reorder level, as per a fixed-order quantity model? R N T Q
R
Delta Company uses special equipment and personnel to changeover production runs quickly. The costs associated with this changeover approach are considered Purchasing costs Setup costs Carrying costs Rapid stock costs
Setup costs
Which order cost is frequently little more than a guess? Setup Ordering Holding Shortage
Shortage
Select all that apply Which of the following affect safety stock levels in a fixed-order quantity model? Check all that apply. Standard deviation of usage during lead time Reorder point in units Lead time in days Desired service level
Standard deviation of usage during lead time Desired service level
Inventory position
The amount on-hand plus on-order minus backordered quantities. In the case where inventory has been allocated for special purposes, the inventory position is reduced by these allocated amounts.
Optimal order quantity (Qopt)
This order size minimizes total annual cost.
Select all that apply An inventory control system is responsible for which of the following? Finding the best price for goods Timing the order placement Keeping track of what has been ordered Receiving goods Ordering goods Selecting new vendors
Timing the order placement Keeping track of what has been ordered Receiving goods Ordering goods
Select all that apply Which of the following is/are manufacturing inventory items? In-transit supplies Work-in-process Finished products Component parts in manufacturing
Work-in-process Finished products Component parts in manufacturing
Inventory turn
a measure of the expected number of times inventory is replaced over a year
Cycle counting
a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year
Inventory
all the money that the system has invested in purchasing things it intends to sell
Reorder point (R)
an order is placed when inventory drops to this level
The two critical components of ALL reorder point calculation scenarios are: average daily demand and lead time in days annual demand and lead time in days average product costs and average daily lead time order cycle time and transportation costs
average daily demand and lead time in days
A _________________ is when the order is held and filled at a later date when the inventory for the item is replenished.
backorder
When then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n)_______________ demand environment.
dependent
___________________ inventory includes in-transit items or at a warehouse ready for shipment to the customer.
distribution
ABC inventory classific
divides inventory into dollar volume categories that map into strategies appropriate for the category
Fixed-order quantity models are _____________ triggered.
event
Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand. independent forecasted dependent marketing
independent
The time between placing an order and receiving the item(s) is called: lead time cycle count reorder point demand variation
lead time
As it relates to inventory, a buyer's time expended to prepare the purchase order for more material is considered a(n) ____ cost. execution holding buffer ordering
ordering
The managerial and clerical costs to prepare purchase or production orders are called: ordering costs logistics costs shortage costs holding costs
ordering costs
The fixed-order quantity model is a _______________ system, which requires that every time a withdrawal from inventory or an addition to inventory is made, records must be updated to reflect whether the reorder point has been reached.
perpetual
The fixed-order quantity model is a __________________system, which requires that every time a withdrawal from inventory or an addition to inventory is made, records must be updated to reflect whether the reorder point has been reached.
perpetual
If safety stock is ______________, the effect is to place a reorder sooner.
positive
Safety stock inventory levels are determined by the__________________ of stock out at a given desired service level.
probability, chance, or likelihood
Safety Stock
the amount of inventory carried in addition to the expected demand
Independent demand
the demands for these items are unrelated to each other, or to activities that can be predicted with certainty
Dependent demand
the need for any one item is a direct result of the need for some other item, usually an item of which it is a part. Also, when the demand for the item can be predicted with accuracy due to a schedule or specific activity
Price-break model
this model is useful for finding the order quantity of an item when the price of the item varies with the order size
Fixed-time-period models are ______________ triggered.
time
The probability approach to determining safety stock considers only the probability of running out of stock, not how ______________ many we are short.
units
This is safety stock. zσT+L q I A d(T+L)
zσT+L