Exam 8: Quantity and Inventory

In fixed period inventory models, orders are placed when the reorder point is reached.

The three main inputs of a material requirements planning MRP) system are:

Which statement is most accurate when thinking about deciding how much to buy::

MRP II systems link the organization's planning processes with its financial system to produce "what if" scenarios to help achieve sales and profitability projections.

CPFR is a business practice in which multiple trading partners agree to exchange knowledge and share risks to generate the most accurate forecast possible and develop effective replenishment plans.

The basic elements of inventory carrying costs are capital costs, inventory service costs, storage space costs, and projected costs of lost sales..

On an annual requirement of 100 items spread evenly throughout the year, any purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $120. If the inventory carrying cost is 25 percent per year and assuming no ordering costs:

"A" items in ABC analysis are:

Service coverage is the ability of purchasing to meet the needs of its internal customers.

Inventory use that is determined directly by customer orders is called:

When a retailer uses daily sales of each product to identify patterns and to forecast inventory requirements, this is an example of:

Closed-loop MRP:

Stockout costs:

JIT requires infrequent deliveries of relatively large quantities in compliance with quality standards.

For the supply management function, time-based strategies that impact competitive advantage relate to cycle time reductions and greater coordination of materials and information flows.

In Kanban systems large raw material inventories are unnecessary.

A buffer inventory:

When the carrying cost of inventory is expressed as a percentage:

ABC analysis categorizes purchases or inventory into different groups, normally based on the value or impact on the profitability of the organization.