OPRE 4320 FINAL QUESTIONS WITH VERIFIED
ANSWERS
safety stock - Answers - a quantity of stock held to satisfy unexpectedly high
requirements in the stocking up period
reasons for carrying reasonable amount of safety stock - Answers - uncertainty in
demand due to forecast inaccuracy and uncertainty in replenishment due to unreliable
supplies
What are the negative consequences with safety stock? - Answers - Excess inventory
and long cycle times
What are the two major decisions of safety stock - Answers - Where should the safety
stock be held in the supply chain and how much safety stock to carry
What are the two strategies supply chains have when handling demand? - Answers -
Push and pull
push - Answers - push the inventory in anticipation of actual demand
who uses push demand? - Answers - retailers
pull - Answers - wait until you know the demand then push the inventory to the customer
who uses pull demand - Answers - defense manufactuers
push/pull - Answers - push the inventory to a point in the supply chain in anticipation of
demand then wait until customer orders to pull it to the customer
who uses push/pull demand - Answers - computer manufactures
At what point in the supply chain should safety stock be held? - Answers - where the
customer pulls or the push/pull boundary
What are the variables to determine how much safety stock to carry - Answers - The
desired service level, the accuracy of forecast and the replenishment lead time
The desired service level (SL) - Answers - the higher the service level the greater the
safety stock
the accuracy of forecast - Answers - the less accurate the forecast the greater the
saftey stock
, the replenishment lead time (RLT) - Answers - the longer the replenishment lead time
the greater the safety stock
push pull boundary - Answers - represents that point where customers make their
choices and final demand decisions
What are the ways SAP ERP allows safety stock to be specified? - Answers - Absolute
safety stock, safety days' supply, automatic calculation of safety stock
absolute safety stock - Answers - always carry an extra 10 untis to cover uncertainties
safety days' supply - Answers - the supply should arrive 3 days earlier than actually
needed
A planner should never - Answers - use all types of safety stock specifications for the
same material
what does absolute safety stock display as - Answers - demand in the stock
requirements list (MD04)
safety stock is in what material master view - Answers - MRP 2 View
safety stock may be invaded - Answers - used to satisfy normal demands
Consumption based planning - Answers - a generic term for the procedure within
material requirements planning for which replenishment planning is based upon the
consumption of inventory
Consumption based planning methods - Answers - reorder point planning, manual
reorder point, automatic reorder point
classical re-order point - Answers - ROP = Demand during RLT + Safety Stock
What conditions need to exist to consider manual reorder point a good method? -
Answers - Demand is relatively constant and we have a good historical data.
Replenishment lead times are predictable and we have a good historical data.
What does the check every time a material is withdrawn from the warehouse - Answers
- Whether the withdrawal has caused stock levels to fall below the reorder point
If material withdrawal has caused stock levels to fall below the reorder point then -
Answers - the system makes an entry in the planning file for the next planning run
A planning file entry will cause MRP to - Answers - create a new procurement proposal
(request for requisition) for the material
ANSWERS
safety stock - Answers - a quantity of stock held to satisfy unexpectedly high
requirements in the stocking up period
reasons for carrying reasonable amount of safety stock - Answers - uncertainty in
demand due to forecast inaccuracy and uncertainty in replenishment due to unreliable
supplies
What are the negative consequences with safety stock? - Answers - Excess inventory
and long cycle times
What are the two major decisions of safety stock - Answers - Where should the safety
stock be held in the supply chain and how much safety stock to carry
What are the two strategies supply chains have when handling demand? - Answers -
Push and pull
push - Answers - push the inventory in anticipation of actual demand
who uses push demand? - Answers - retailers
pull - Answers - wait until you know the demand then push the inventory to the customer
who uses pull demand - Answers - defense manufactuers
push/pull - Answers - push the inventory to a point in the supply chain in anticipation of
demand then wait until customer orders to pull it to the customer
who uses push/pull demand - Answers - computer manufactures
At what point in the supply chain should safety stock be held? - Answers - where the
customer pulls or the push/pull boundary
What are the variables to determine how much safety stock to carry - Answers - The
desired service level, the accuracy of forecast and the replenishment lead time
The desired service level (SL) - Answers - the higher the service level the greater the
safety stock
the accuracy of forecast - Answers - the less accurate the forecast the greater the
saftey stock
, the replenishment lead time (RLT) - Answers - the longer the replenishment lead time
the greater the safety stock
push pull boundary - Answers - represents that point where customers make their
choices and final demand decisions
What are the ways SAP ERP allows safety stock to be specified? - Answers - Absolute
safety stock, safety days' supply, automatic calculation of safety stock
absolute safety stock - Answers - always carry an extra 10 untis to cover uncertainties
safety days' supply - Answers - the supply should arrive 3 days earlier than actually
needed
A planner should never - Answers - use all types of safety stock specifications for the
same material
what does absolute safety stock display as - Answers - demand in the stock
requirements list (MD04)
safety stock is in what material master view - Answers - MRP 2 View
safety stock may be invaded - Answers - used to satisfy normal demands
Consumption based planning - Answers - a generic term for the procedure within
material requirements planning for which replenishment planning is based upon the
consumption of inventory
Consumption based planning methods - Answers - reorder point planning, manual
reorder point, automatic reorder point
classical re-order point - Answers - ROP = Demand during RLT + Safety Stock
What conditions need to exist to consider manual reorder point a good method? -
Answers - Demand is relatively constant and we have a good historical data.
Replenishment lead times are predictable and we have a good historical data.
What does the check every time a material is withdrawn from the warehouse - Answers
- Whether the withdrawal has caused stock levels to fall below the reorder point
If material withdrawal has caused stock levels to fall below the reorder point then -
Answers - the system makes an entry in the planning file for the next planning run
A planning file entry will cause MRP to - Answers - create a new procurement proposal
(request for requisition) for the material
