OTM 300 Exam 2 QUESTIONS WITH
CORRECT ANSWERS
Stochastic - CORRECT ANSWERS ✔✔Unpredictable variation in demand
\/| \/| \/| \/| \/| \/| \/|
You need to have safety stock inventory as a result to not lose out on stockouts
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
often
\/|
Days-of-supply - CORRECT ANSWERS ✔✔Average amount of time it takes a\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
unit to flow thru the system (flow time)
\/| \/| \/| \/| \/| \/| \/| \/|
Amount of time it takes inventory to flow thru a process
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
Inventory turns - CORRECT ANSWERS ✔✔the number of times the average
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
inventory flows through a process in a designated interval of time
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
R/I
Flow rate /Average Inventory
\/| \/| \/|
TUrnovers vary by industry, food has very high rates
\/| \/| \/| \/| \/| \/| \/| \/|
,Holding cost percentage - CORRECT ANSWERS ✔✔the ratio of the cost to hold
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
an item in inventory during a designated time period relative to the cost to
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
purchase the item
\/| \/| \/|
cost to hold/cost of inventory
\/| \/| \/| \/|
Inventory holding costs as a % of COGS - CORRECT ANSWERS ✔✔Annual
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
holding cost percentage/Annual Turns
\/| \/| \/| \/|
Supply Chain Tiers - CORRECT ANSWERS ✔✔Tier II supplier Design and
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
manufacturing of specialized components
\/| \/| \/| \/|
Tier I supplier Design and assembly of component systems
\/| \/| \/| \/| \/| \/| \/| \/| \/|
Original equipment manufacturer (OEM): Design and assembly of final
\/| \/| \/| \/| \/| \/| \/| \/|
products
\/| \/|
Boeing—aircraft
Distributor: Inventory storage, break-bulk, transportation \/| \/| \/| \/| \/|
Sysco—food
Retailer: Product assortment, consumer support and services
\/| \/| \/| \/| \/| \/|
Breaking Bulk - CORRECT ANSWERS ✔✔Distributors can purchase in large
\/| \/| \/| \/| \/| \/| \/| \/| \/|
quantities from manufacturers but then allow their customers to purchase in
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
smaller quantities
\/| \/|
,Distributors minimize the amount of space needed for inventory, LOWER\/| \/| \/| \/| \/| \/| \/| \/| \/|
INVENTORY
\/|
INCREASES TRANSPORTATION COSTS/DISTANCE/FREQUENCY \/| \/|
extra handling of products
\/| \/| \/|
Transportation - CORRECT ANSWERS ✔✔Ocean is slowest, cheapest \/| \/| \/| \/| \/| \/| \/|
Rail is lowish cost, inflexible/slow
\/| \/| \/| \/|
Truck is fastish, expensive over land
\/| \/| \/| \/| \/|
Air is most expensive, fastest
\/| \/| \/| \/|
in-stock probability - CORRECT ANSWERS ✔✔the probability that all demand
\/| \/| \/| \/| \/| \/| \/| \/| \/|
was able to purchase a unit
\/| \/| \/| \/| \/| \/|
Fill rate - CORRECT ANSWERS ✔✔fraction of demand satisfied
\/| \/| \/| \/| \/| \/| \/| \/|
need to know demand amount, which is difficult to discern
\/| \/| \/| \/| \/| \/| \/| \/| \/|
, Functional products - CORRECT ANSWERS ✔✔Products that have predictable
\/| \/| \/| \/| \/| \/| \/| \/|
demand so primary focus is on minimizing physical costs. Qualities include:
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
-Efficient Supply Chain \/| \/|
-Long life cycle \/| \/|
-Low margins \/|
-Low variety \/| \/|
-Low forecast error and stockout rate
\/| \/| \/| \/| \/|
-Long lead times \/| \/|
Innovative products - CORRECT ANSWERS ✔✔characterized by short product
\/| \/| \/| \/| \/| \/| \/| \/|
life cycles, volatile demand, high profit margins, and relatively less
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
competition
\/|
very high margins, risky, later fire sales to cope with excess inventory
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
Physically efficient - CORRECT ANSWERS ✔✔- high utilization
\/| \/| \/| \/| \/| \/| \/|
- less focused on lead times
\/| \/| \/| \/| \/|
- less focus on flexible product designs
\/| \/| \/| \/| \/| \/|
- more focus on low-cost suppliers
\/| \/| \/| \/| \/|
low inventory
\/|
Market-responsive - CORRECT ANSWERS ✔✔- low utilization \/| \/| \/| \/| \/| \/|
- more focused on lead times
\/| \/| \/| \/| \/|
CORRECT ANSWERS
Stochastic - CORRECT ANSWERS ✔✔Unpredictable variation in demand
\/| \/| \/| \/| \/| \/| \/|
You need to have safety stock inventory as a result to not lose out on stockouts
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
often
\/|
Days-of-supply - CORRECT ANSWERS ✔✔Average amount of time it takes a\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
unit to flow thru the system (flow time)
\/| \/| \/| \/| \/| \/| \/| \/|
Amount of time it takes inventory to flow thru a process
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
Inventory turns - CORRECT ANSWERS ✔✔the number of times the average
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
inventory flows through a process in a designated interval of time
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
R/I
Flow rate /Average Inventory
\/| \/| \/|
TUrnovers vary by industry, food has very high rates
\/| \/| \/| \/| \/| \/| \/| \/|
,Holding cost percentage - CORRECT ANSWERS ✔✔the ratio of the cost to hold
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
an item in inventory during a designated time period relative to the cost to
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
purchase the item
\/| \/| \/|
cost to hold/cost of inventory
\/| \/| \/| \/|
Inventory holding costs as a % of COGS - CORRECT ANSWERS ✔✔Annual
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
holding cost percentage/Annual Turns
\/| \/| \/| \/|
Supply Chain Tiers - CORRECT ANSWERS ✔✔Tier II supplier Design and
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
manufacturing of specialized components
\/| \/| \/| \/|
Tier I supplier Design and assembly of component systems
\/| \/| \/| \/| \/| \/| \/| \/| \/|
Original equipment manufacturer (OEM): Design and assembly of final
\/| \/| \/| \/| \/| \/| \/| \/|
products
\/| \/|
Boeing—aircraft
Distributor: Inventory storage, break-bulk, transportation \/| \/| \/| \/| \/|
Sysco—food
Retailer: Product assortment, consumer support and services
\/| \/| \/| \/| \/| \/|
Breaking Bulk - CORRECT ANSWERS ✔✔Distributors can purchase in large
\/| \/| \/| \/| \/| \/| \/| \/| \/|
quantities from manufacturers but then allow their customers to purchase in
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
smaller quantities
\/| \/|
,Distributors minimize the amount of space needed for inventory, LOWER\/| \/| \/| \/| \/| \/| \/| \/| \/|
INVENTORY
\/|
INCREASES TRANSPORTATION COSTS/DISTANCE/FREQUENCY \/| \/|
extra handling of products
\/| \/| \/|
Transportation - CORRECT ANSWERS ✔✔Ocean is slowest, cheapest \/| \/| \/| \/| \/| \/| \/|
Rail is lowish cost, inflexible/slow
\/| \/| \/| \/|
Truck is fastish, expensive over land
\/| \/| \/| \/| \/|
Air is most expensive, fastest
\/| \/| \/| \/|
in-stock probability - CORRECT ANSWERS ✔✔the probability that all demand
\/| \/| \/| \/| \/| \/| \/| \/| \/|
was able to purchase a unit
\/| \/| \/| \/| \/| \/|
Fill rate - CORRECT ANSWERS ✔✔fraction of demand satisfied
\/| \/| \/| \/| \/| \/| \/| \/|
need to know demand amount, which is difficult to discern
\/| \/| \/| \/| \/| \/| \/| \/| \/|
, Functional products - CORRECT ANSWERS ✔✔Products that have predictable
\/| \/| \/| \/| \/| \/| \/| \/|
demand so primary focus is on minimizing physical costs. Qualities include:
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
-Efficient Supply Chain \/| \/|
-Long life cycle \/| \/|
-Low margins \/|
-Low variety \/| \/|
-Low forecast error and stockout rate
\/| \/| \/| \/| \/|
-Long lead times \/| \/|
Innovative products - CORRECT ANSWERS ✔✔characterized by short product
\/| \/| \/| \/| \/| \/| \/| \/|
life cycles, volatile demand, high profit margins, and relatively less
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
competition
\/|
very high margins, risky, later fire sales to cope with excess inventory
\/| \/| \/| \/| \/| \/| \/| \/| \/| \/| \/|
Physically efficient - CORRECT ANSWERS ✔✔- high utilization
\/| \/| \/| \/| \/| \/| \/|
- less focused on lead times
\/| \/| \/| \/| \/|
- less focus on flexible product designs
\/| \/| \/| \/| \/| \/|
- more focus on low-cost suppliers
\/| \/| \/| \/| \/|
low inventory
\/|
Market-responsive - CORRECT ANSWERS ✔✔- low utilization \/| \/| \/| \/| \/| \/|
- more focused on lead times
\/| \/| \/| \/| \/|
