SCM 301 Final Exam Questions with
Quality Answers 2026-2027 Updated.
Inventory - Answer A stock of materials used to satisfy customer demand or to support the
production of goods or services
Inventory management - Answer Planning and controlling of inventories to meet competitive
priorities of the organization
Why Smaller Inventories - Answer Cost of capital, storage and handling costs, taxes,
insurance, shrinkage (Pilferage, obsolescence, deterioration)
Why Bigger Inventories - Answer Better customer service, avoid stockouts; smaller ordering
costs; smaller setup cost; smaller labor and equipment utilization costs; payments to suppliers
Accounting inventories - Answer Raw materials, work in process goods, finished goods
Operational inventories - Answer Cycle inventory, safety stock inventory, anticipation
inventory, pipeline inventory
Raw materials - Answer Unprocessed material - basic material used to produce goods,
finished products, energy, or intermediate materials which are feedstock for future finished
products
Work in process - Answer Company's partially finished goods waiting for completion and
eventual sale or the value of these items
Finished goods - Answer Items for distribution or sale
Cycle inventory - Answer On hand inventory (Total Inventory - Safety Stock) that varies
directly with lot size and firm has currently on hand (how frequent to order? What quantity?)
Safety stock inventory - Answer To avoid customer problems, costs of unavailable products,
surplus inventory that protects against demand uncertainties
Anticipation inventory - Answer To meet predictable spikes in demand (seasonal)
, Pipeline inventory - Answer Goods that have left firms warehouses but are still in the
company's distribution chain as they are not yet bought by ultimate consumers
Reduce cycle inventory - Answer Reduce lot size - reduce ordering and setup costs and allow
quantity to be reduced - increase repeatability to eliminate the need for changeovers
Reduce safety stock - Answer Place orders closer to the time when they must be received -
improve demand forecasts, cut lead times, reduce supply uncertainties, rely more on
equipment and labor buffers
Reduce anticipation inventory - Answer Match demand rate with production rates - add new
products with different demand cycles - provide off season promotional campaigning, offer
seasonal pricing plans
Reduce pipeline inventory - Answer Reduce lead times - find more responsive suppliers and
select new carriers - change quantity in those cases where the lead time depends on the lot size
Average cycle inventory - Answer #NAME?
Pipeline inventory - Answer = d-bar * L ( average demand per period * number of periods in
the item's lead time)
ABC Analysis - Answer Process of dividing SKUs into three classes, according to their dollar
usage - for managers to focus on items that have the highest dollar value - A is most valuable, C
is least valuable
A Items - Answer 80% or more - Tight inventory control, more secure storage and better sales
forecasts, reorders should be frequent with weekly or daily reorder, avoiding stock outs is a
priority
B Items - Answer 30% - benefit from intermediate status - monitor potential evolution to the
other two classes
C Items - Answer 5% - reorder these less frequently - having only 1 unit on hand and
recording only when the purchase is made - approach leads to stock outs which can be
acceptable - these items have low demand and high inventory costs
Economic Order Quantity - Answer Is the lot size, Q, that minimizes the total annual
inventory holding and ordering costs
Quality Answers 2026-2027 Updated.
Inventory - Answer A stock of materials used to satisfy customer demand or to support the
production of goods or services
Inventory management - Answer Planning and controlling of inventories to meet competitive
priorities of the organization
Why Smaller Inventories - Answer Cost of capital, storage and handling costs, taxes,
insurance, shrinkage (Pilferage, obsolescence, deterioration)
Why Bigger Inventories - Answer Better customer service, avoid stockouts; smaller ordering
costs; smaller setup cost; smaller labor and equipment utilization costs; payments to suppliers
Accounting inventories - Answer Raw materials, work in process goods, finished goods
Operational inventories - Answer Cycle inventory, safety stock inventory, anticipation
inventory, pipeline inventory
Raw materials - Answer Unprocessed material - basic material used to produce goods,
finished products, energy, or intermediate materials which are feedstock for future finished
products
Work in process - Answer Company's partially finished goods waiting for completion and
eventual sale or the value of these items
Finished goods - Answer Items for distribution or sale
Cycle inventory - Answer On hand inventory (Total Inventory - Safety Stock) that varies
directly with lot size and firm has currently on hand (how frequent to order? What quantity?)
Safety stock inventory - Answer To avoid customer problems, costs of unavailable products,
surplus inventory that protects against demand uncertainties
Anticipation inventory - Answer To meet predictable spikes in demand (seasonal)
, Pipeline inventory - Answer Goods that have left firms warehouses but are still in the
company's distribution chain as they are not yet bought by ultimate consumers
Reduce cycle inventory - Answer Reduce lot size - reduce ordering and setup costs and allow
quantity to be reduced - increase repeatability to eliminate the need for changeovers
Reduce safety stock - Answer Place orders closer to the time when they must be received -
improve demand forecasts, cut lead times, reduce supply uncertainties, rely more on
equipment and labor buffers
Reduce anticipation inventory - Answer Match demand rate with production rates - add new
products with different demand cycles - provide off season promotional campaigning, offer
seasonal pricing plans
Reduce pipeline inventory - Answer Reduce lead times - find more responsive suppliers and
select new carriers - change quantity in those cases where the lead time depends on the lot size
Average cycle inventory - Answer #NAME?
Pipeline inventory - Answer = d-bar * L ( average demand per period * number of periods in
the item's lead time)
ABC Analysis - Answer Process of dividing SKUs into three classes, according to their dollar
usage - for managers to focus on items that have the highest dollar value - A is most valuable, C
is least valuable
A Items - Answer 80% or more - Tight inventory control, more secure storage and better sales
forecasts, reorders should be frequent with weekly or daily reorder, avoiding stock outs is a
priority
B Items - Answer 30% - benefit from intermediate status - monitor potential evolution to the
other two classes
C Items - Answer 5% - reorder these less frequently - having only 1 unit on hand and
recording only when the purchase is made - approach leads to stock outs which can be
acceptable - these items have low demand and high inventory costs
Economic Order Quantity - Answer Is the lot size, Q, that minimizes the total annual
inventory holding and ordering costs
