Module 2 SCM 300
I
nventory - CORRECT ANSWER-The items that are owned by a company for the
purpose of present or future sales or for use in day-to-day operations
Lead time - CORRECT ANSWER-The period of time between when an order is
placed and when the order is received
Lot size - CORRECT ANSWER-An accepted order size
Demand forecasting - CORRECT ANSWER-A predictive analysis and/or
estimation of consumer demand in a future period
SKU (Stock Keeping Unit) - CORRECT ANSWER-A specific product or service's
identification code used to track inventory or catalog sales
Independent Demand - CORRECT ANSWER-An item for which demand levels
are not directly impacted by the demand of another related item.
Dependent Demand - CORRECT ANSWER-An item for which demand levels are
directly impacted by the demand of another related item
8 Inventory Classifications - CORRECT ANSWER-Raw materials, work in
process (WIP), finished goods (FG), maintenance repair & operations (MRO),
market inventory, safety stock (buffer stock), anticipation inventory, pipeline
inventory,
Raw Materials - CORRECT ANSWER-Typically refers to material, parts, or
components that will be used to create an end item or service
Work-in-Process (WIP) - CORRECT ANSWER-Items that have begun the
manufacturing process but are not yet completed
Finished Goods (FG) - CORRECT ANSWER-Items that are completed and ready
for shipment at a manufacturing facility or assembly plant
, Maintenance, Repair, and Operations (MRO) - CORRECT ANSWER-Items that
are not intended as part of the finished goods but are important to the daily
operations of the company
Market Inventory - CORRECT ANSWER-Inventory that is readily available on the
shelf
Safety Stock (buffer stock) - CORRECT ANSWER-Inventory kept to account for
variation/uncertainty of demand
Anticipation Inventory - CORRECT ANSWER-Inventory that is created and
stored for future use. Typically used to absorb uneven rates of demand that may
be related to seasonal demand or planned price reductions
Pipeline Inventory - CORRECT ANSWER-Inventory in transit between two
points. Those two points establish the pipeline. So the inventory does not
necessarily need to be on a truck or train.
Pipeline Inventory = Periodic demand * Lead time
Pipeline Inventory = dL
Pros of High Inventory Levels - CORRECT ANSWER-Higher levels of customer
service - Having inventory will help a company address their immediate demand
for product
Quantity discounts may be possible - Lower per unit costs
Fewer orders will need to be placed - Possibly lower ordering costs and
transportation costs
Greater security against unexpected demand variability
Pros of Low Inventory Levels - CORRECT ANSWER-Less storage space
required - Costs of holding inventory may be lower
Lower chance of inventory obsolescence and shrinkage
I
nventory - CORRECT ANSWER-The items that are owned by a company for the
purpose of present or future sales or for use in day-to-day operations
Lead time - CORRECT ANSWER-The period of time between when an order is
placed and when the order is received
Lot size - CORRECT ANSWER-An accepted order size
Demand forecasting - CORRECT ANSWER-A predictive analysis and/or
estimation of consumer demand in a future period
SKU (Stock Keeping Unit) - CORRECT ANSWER-A specific product or service's
identification code used to track inventory or catalog sales
Independent Demand - CORRECT ANSWER-An item for which demand levels
are not directly impacted by the demand of another related item.
Dependent Demand - CORRECT ANSWER-An item for which demand levels are
directly impacted by the demand of another related item
8 Inventory Classifications - CORRECT ANSWER-Raw materials, work in
process (WIP), finished goods (FG), maintenance repair & operations (MRO),
market inventory, safety stock (buffer stock), anticipation inventory, pipeline
inventory,
Raw Materials - CORRECT ANSWER-Typically refers to material, parts, or
components that will be used to create an end item or service
Work-in-Process (WIP) - CORRECT ANSWER-Items that have begun the
manufacturing process but are not yet completed
Finished Goods (FG) - CORRECT ANSWER-Items that are completed and ready
for shipment at a manufacturing facility or assembly plant
, Maintenance, Repair, and Operations (MRO) - CORRECT ANSWER-Items that
are not intended as part of the finished goods but are important to the daily
operations of the company
Market Inventory - CORRECT ANSWER-Inventory that is readily available on the
shelf
Safety Stock (buffer stock) - CORRECT ANSWER-Inventory kept to account for
variation/uncertainty of demand
Anticipation Inventory - CORRECT ANSWER-Inventory that is created and
stored for future use. Typically used to absorb uneven rates of demand that may
be related to seasonal demand or planned price reductions
Pipeline Inventory - CORRECT ANSWER-Inventory in transit between two
points. Those two points establish the pipeline. So the inventory does not
necessarily need to be on a truck or train.
Pipeline Inventory = Periodic demand * Lead time
Pipeline Inventory = dL
Pros of High Inventory Levels - CORRECT ANSWER-Higher levels of customer
service - Having inventory will help a company address their immediate demand
for product
Quantity discounts may be possible - Lower per unit costs
Fewer orders will need to be placed - Possibly lower ordering costs and
transportation costs
Greater security against unexpected demand variability
Pros of Low Inventory Levels - CORRECT ANSWER-Less storage space
required - Costs of holding inventory may be lower
Lower chance of inventory obsolescence and shrinkage
