Operations and Supply Chain
Management**PP Study guide Latest
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These parts and materials are Raw Materials
obtained from suppliers and are
used in the production process.
These are partly finished parts, Work-in-process (WIP)
components, subassemblies, or
modules.
Items are ready to ship to the Finished Goods
customer. No more work is
required.
These are maintained to replace Replacement Parts
other parts in machinery or
equipment as those parts wear
out.
Parts or materials are used to Supplies
support the production process but
not usually a component of the
product. These items, such as
lubricant and cutting tools, are
consumed in the production
process.
,The portion of inventory that is in Transportation (pipeline)
the
process of being shipped through
the distribution system.
-Used for inventory that requires Perpetual Inventory System:
an
exact inventory balance at all
times
-Most suitable for big businesses,
large retail stores and/or Banks
-Most appropriate for high value
and
high volume items
-Best for accurate financial
statements
-Expensive to implement and
maintain
-Requires a physical count to Periodic Inventory System:
know
exact inventory balances
-Used when a supplier will only
deliver at specific time intervals
(during open window)
-Most appropriate for low value
and
low volume items
-Most appropriate for small
businesses
-Inexpensive to implement and
maintain
, -For inventory that doesn't require EOQ (Economic Order Quantity) is used:
production
-when demand is constant and
known
-when cost per unit does not
depend on order quantity
-Most appropriate for retail stores
or
companies that order finished
goods
-For inventory that will be used in EPQ (Economic Production Quantity) is
production used:
-When incremental ordering and
depletion of inventory is allowed
-Also called production order
quantity
-Most appropriate for
manufacturing
and production companies
A discount offered in price for Quantity discount model:
ordering above a specified amount
A discount offered on shipping Transportation discounts:
cost
for ordering above a specified
amount.
Management**PP Study guide Latest
Premium Exam Questions and Answers with
Verified Solutions | Latest Updated 2026
These parts and materials are Raw Materials
obtained from suppliers and are
used in the production process.
These are partly finished parts, Work-in-process (WIP)
components, subassemblies, or
modules.
Items are ready to ship to the Finished Goods
customer. No more work is
required.
These are maintained to replace Replacement Parts
other parts in machinery or
equipment as those parts wear
out.
Parts or materials are used to Supplies
support the production process but
not usually a component of the
product. These items, such as
lubricant and cutting tools, are
consumed in the production
process.
,The portion of inventory that is in Transportation (pipeline)
the
process of being shipped through
the distribution system.
-Used for inventory that requires Perpetual Inventory System:
an
exact inventory balance at all
times
-Most suitable for big businesses,
large retail stores and/or Banks
-Most appropriate for high value
and
high volume items
-Best for accurate financial
statements
-Expensive to implement and
maintain
-Requires a physical count to Periodic Inventory System:
know
exact inventory balances
-Used when a supplier will only
deliver at specific time intervals
(during open window)
-Most appropriate for low value
and
low volume items
-Most appropriate for small
businesses
-Inexpensive to implement and
maintain
, -For inventory that doesn't require EOQ (Economic Order Quantity) is used:
production
-when demand is constant and
known
-when cost per unit does not
depend on order quantity
-Most appropriate for retail stores
or
companies that order finished
goods
-For inventory that will be used in EPQ (Economic Production Quantity) is
production used:
-When incremental ordering and
depletion of inventory is allowed
-Also called production order
quantity
-Most appropriate for
manufacturing
and production companies
A discount offered in price for Quantity discount model:
ordering above a specified amount
A discount offered on shipping Transportation discounts:
cost
for ordering above a specified
amount.
