OPMA 401 - Chapter 2 questions well
answered to pass graded A+
Inventory Management Objective - correct answer ✔✔strike a balance between
inventory
investment and customer service
Responsiveness - correct answer ✔✔Ability to respond to a wide range in
demand, short lead times, build innovative products, meet a high service level,
handle supply uncertainty, etc.
Inventory Role in the Supply Chain - correct answer ✔✔Mismatch between supply
and demand
Exploit economies of scale
Reduce costs
Improve product availability
Affects assets, costs, responsiveness, material flow time
Effective Inventory Management - correct answer ✔✔Requires:
1. A system keep track of inventory
2. A reliable forecast of demand
3. Knowledge of lead time and lead time variability
4. Reasonable estimates of
holding costs
, ordering costs
shortage costs
5. A classification system for inventory items
Inventory - correct answer ✔✔- a stock of goods
- both an asset and liability
Types of Inventory - correct answer ✔✔raw materials, work in process,
maintenance/repair/operating (MRO), finished goods
Functions of Inventory - correct answer ✔✔1. To decouple or separate various
parts of the production process
2. To decouple the firm from fluctuations in demand and provide a stock of goods
that will provide a selection for customers
3. To take advantage of quantity discounts
4. To hedge against inflation
Functions of Carrying Inventory - correct answer ✔✔1. Cycle Stock: Because we
tend to order in batches
2. Buffer (Safety) Stock: T o avoid shortages
3. Anticipation Stock: In case of anticipated higher demand (seasonal)
4. Pipeline (Transit) Inventories: Held due to supply lead times
5. Decoupling Stock: Whenever we physically separate a process
6. Hedging: in case of a strike or commodity price increase
answered to pass graded A+
Inventory Management Objective - correct answer ✔✔strike a balance between
inventory
investment and customer service
Responsiveness - correct answer ✔✔Ability to respond to a wide range in
demand, short lead times, build innovative products, meet a high service level,
handle supply uncertainty, etc.
Inventory Role in the Supply Chain - correct answer ✔✔Mismatch between supply
and demand
Exploit economies of scale
Reduce costs
Improve product availability
Affects assets, costs, responsiveness, material flow time
Effective Inventory Management - correct answer ✔✔Requires:
1. A system keep track of inventory
2. A reliable forecast of demand
3. Knowledge of lead time and lead time variability
4. Reasonable estimates of
holding costs
, ordering costs
shortage costs
5. A classification system for inventory items
Inventory - correct answer ✔✔- a stock of goods
- both an asset and liability
Types of Inventory - correct answer ✔✔raw materials, work in process,
maintenance/repair/operating (MRO), finished goods
Functions of Inventory - correct answer ✔✔1. To decouple or separate various
parts of the production process
2. To decouple the firm from fluctuations in demand and provide a stock of goods
that will provide a selection for customers
3. To take advantage of quantity discounts
4. To hedge against inflation
Functions of Carrying Inventory - correct answer ✔✔1. Cycle Stock: Because we
tend to order in batches
2. Buffer (Safety) Stock: T o avoid shortages
3. Anticipation Stock: In case of anticipated higher demand (seasonal)
4. Pipeline (Transit) Inventories: Held due to supply lead times
5. Decoupling Stock: Whenever we physically separate a process
6. Hedging: in case of a strike or commodity price increase
