Exam 12: Managing Inventory Throughout the Supply Chain

The excess cost of an item is the profit you would have made on it.

The bullwhip effect says that a small change in demand downstream in the supply chain causes a large change in demand upstream.

A replenishment order for inventory is made when a predetermined stock level is reached in a(n)________ inventory system.

The reorder point increases as the service level falls.

A target service level is the point where the expected cost of a shortage equals the expected cost of having excess units.

The inventory that companies hold to protect themselves against uncertainties in either demand or replenishment time is called:

The ________ is an extreme change in the supply position upstream generated by a small change in demand downstream.

Supply chain inventory:

Order quantity decisions are typically made in isolation from considerations of transportation,packaging,and material handling.

The value of goods on a "per unit" basis far upstream in a supply chain is greater than the value of those same goods far downstream in a supply chain.

The food engineers at Moria Foods have developed a new variety of banana they have named the "mayfly banana" which holds perfect ripeness for exactly one day before becoming a black-skinned sack of putrid mush.Which of these actions will result in a lower order quantity from the many retail establishments clamoring to stock up on this new foodstuff?

The order quantity in a periodic review system rises as the on-hand inventory falls.

In a(n)________ review system,orders are placed at a constant time interval,but in a(n)________ review system,a constant order is placed at a variable time level.

Companies do not plan to use safety stock.

A company that orders at their economic order quantity has an annual ordering cost that is half of their total cost.

In order to find the lowest cost ordering policy in a quantity discount model,you must compare the holding cost,ordering cost,and the cost of goods for various order quantities.

Define the bullwhip effect and discuss the advantages of holding inventory far upstream or downstream in the supply chain.

A hospital's biomedical repair shop uses a 4-week periodic system to maintain the inventory on the blood pressure cuff repair parts.They use an average 40 adult arm cuffs with a standard deviation of 6 cuffs every four weeks.Cuffs aren't the most critical item they carry,but the manager would like to avoid the embarrassment of a stockout at least 95% of the time.What should their restocking level be?

The flexibility of inventory increases as materials move down the supply chain.

The factory produces product and ships it to the distributor.The distributor sends it to the wholesaler when they receive an order.The wholesaler ships the product to the retailer as the retailer requests replenishment.The customer visits the retailer's bricks and mortar store to purchase the product when they run out.Which of these supply chain members is most likely subjected to the greatest variability in customer demand?