Supply Chain Management Exam 3
Questions Fully Solved.
Inventory - Answer Supply of resources; materials, goods, and commodities
Raw Material - Answer A good purchased at basic form in order to go into another good being made
Work in Process - Answer Inventory being turned into final product; various stages
Bottleneck - Answer Slowest part of work in process determines maximum amount of capacity;
inventory builds up
Finished Goods - Answer Final product of production process; value added; available for sale
Safety Stock - Answer Extra inventory to protect against uncertainty of demand and lead time;
expected number of units on hand just before replenishment received and available
Cycle Stock - Answer Amount of inventory we expect to sale, achieve economies of scale on
transportation
Anticipatory inventory - Answer Amount of inventory held to buffer planned disruptions and
anticipated demand
In Transit Inventory - Answer Inventory that is in transportation in truck, ship, or airplane; cross docking
at DC still considered
Item Costs - Answer Per unit cost times number of units
Ordering or Set Up Costs - Answer Costs triggered when order taken;
(D/Q)*S
, Shortage Cost - Answer The cost of a stockout
Carrying Cost - Answer Cost of holding inventory
Costs Included under Carrying Cost - Answer Capital, Storage, Risk, and Service costs
Capital Costs - Answer Opportunity cost of carrying inventory; Hurdle rate
Hurdle Rate - Answer Minimum rate of return on investment
Storage Costs - Answer Depends on where it's being stored
Risk Costs - Answer Risk of damage or shrink
Shrink - Answer Risk associated with theft
Obsolescence - Answer Risk of not selling produce (expire) or consumer electronics being replaced by
new
Service Costs - Answer Insurance and Tax Costs
Continuous Review - Answer Fixed order quantity and variable time to order
Periodic Review - Answer Fixed time to order and variable order quantity
Reorder Point (ROP) - Answer Point at which inventory reordered;
daily demand X lead time
Questions Fully Solved.
Inventory - Answer Supply of resources; materials, goods, and commodities
Raw Material - Answer A good purchased at basic form in order to go into another good being made
Work in Process - Answer Inventory being turned into final product; various stages
Bottleneck - Answer Slowest part of work in process determines maximum amount of capacity;
inventory builds up
Finished Goods - Answer Final product of production process; value added; available for sale
Safety Stock - Answer Extra inventory to protect against uncertainty of demand and lead time;
expected number of units on hand just before replenishment received and available
Cycle Stock - Answer Amount of inventory we expect to sale, achieve economies of scale on
transportation
Anticipatory inventory - Answer Amount of inventory held to buffer planned disruptions and
anticipated demand
In Transit Inventory - Answer Inventory that is in transportation in truck, ship, or airplane; cross docking
at DC still considered
Item Costs - Answer Per unit cost times number of units
Ordering or Set Up Costs - Answer Costs triggered when order taken;
(D/Q)*S
, Shortage Cost - Answer The cost of a stockout
Carrying Cost - Answer Cost of holding inventory
Costs Included under Carrying Cost - Answer Capital, Storage, Risk, and Service costs
Capital Costs - Answer Opportunity cost of carrying inventory; Hurdle rate
Hurdle Rate - Answer Minimum rate of return on investment
Storage Costs - Answer Depends on where it's being stored
Risk Costs - Answer Risk of damage or shrink
Shrink - Answer Risk associated with theft
Obsolescence - Answer Risk of not selling produce (expire) or consumer electronics being replaced by
new
Service Costs - Answer Insurance and Tax Costs
Continuous Review - Answer Fixed order quantity and variable time to order
Periodic Review - Answer Fixed time to order and variable order quantity
Reorder Point (ROP) - Answer Point at which inventory reordered;
daily demand X lead time
