Exam 12: Managing Uncertainty in a Supply Chain: Safety Inventory

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The distinction between product fill rate and order fill rate is

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Safety inventory is carried because demand forecasts are accurate and a product shortage may result if the forecast demand exceeds the actual demand.

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A goal of any supply chain manager is to

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The issue of product availability and the level of safety inventory is particularly significant in industries where

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The ________ is the average units of demand that are not satisfied from inventory in stock per replenishment cycle.

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Raising the level of safety inventory increases product availability and thus the margin captured from customer purchases.

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As the safety inventory is increased

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Tracking order fill rates is important when customers place a high value on the entire order being filled simultaneously.

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Periodic review policies require

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For the same safety inventory,an increase in lot size increases the fill rate but not the cycle service level.

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As the uncertainty of supply or demand grows,the required level of safety inventories

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A reduction in supply can help dramatically reduce safety inventory required without hurting product availability.

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If a customer order arrives when product is not available

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Safety inventory is carried because

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Product fill rate is the fraction of product demand that is satisfied from product in inventory.

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Often,safety inventory calculations in practice

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All inventory between a given stage in the supply chain and the final customer is called the

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Lead time is the gap between

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A distributor should decide his safety inventory levels based on

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Manufacturer-driven substitution increases overall profitability for the manufacturer by allowing some aggregation of demand,which reduces the inventory requirements for the same level of availability.

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