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

Both ________ and ________ increase as the safety inventory is increased.

In case demand in different geographical regions is about the same size and independent,aggregation increases safety inventory by the square root of the number of areas aggregated.

A manager using continuous review has to account only for

Periodic review policies for inventory replenishment require safety inventory to cover demand during

When using a continuous review policy,the only thing a manager has to account for is the uncertainty of demand during the lead time.

Scenario 12.2 - Hamsterdam Marlo Stanfield's operation also uses large quantities of prepaid cell phones,on average 1500 per week with a standard deviation of 145.The lead time for their own brand of prepaid cell phones is three weeks and they have a lot size of 350 phones.To ensure they never run out,they keep a safety stock of 500 phones with Proposition Joe. -What is the standard deviation of demand during lead time?

A company that tracks inventory and places an order for a lot size Q when the inventory declines to the reorder point (ROP)is using

Inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period is

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

Postponement allows the supply chain to delay product differentiation,which results in disaggregating most of the inventories in the supply chain.

A shortage occurs in a replenishment cycle

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

Weekly demand for corn tortillas at Big Truck Tacos is normally distributed with a mean of 1500 and a standard deviation of 300.Marco's takes one and one half weeks to supply a Big Truck order.Big Truck is targeting a CSL of 95 percent and monitors its inventory continuously.How much safety inventory of corn tortillas should Big Truck carry? What should their ROP be?

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

A company that checks inventory status at regular periodic intervals and places an order to raise the inventory level to a specified threshold is using

Figure 1: Inventory Profile for Periodic Review Policy -What does the letter E represent in Figure 1?

Given the product variety and high demand uncertainty in most high-tech supply chains,a significant fraction of the inventory carried is safety inventory.

The use of one product to satisfy demand for a different product is

A distributor should decide his safety inventory levels based on

Scenario 12.2 - Hamsterdam Marlo Stanfield's operation also uses large quantities of prepaid cell phones,on average 1500 per week with a standard deviation of 145.The lead time for their own brand of prepaid cell phones is three weeks and they have a lot size of 350 phones.To ensure they never run out,they keep a safety stock of 500 phones with Proposition Joe. -What safety stock should be held to put the fill rate at 0.99?