24 - Inventory management

Question 1

Define inventory management

Answer 1

the process of ordering, sotring and using a company’s inventory

Question 2

Define economic order quantity

Answer 2

the optimum or leastcost quantity of stock to re-order taking into account delivery costs and stock-holding costs

Question 3

Define buffer inventories

Answer 3

minimum inventory level that should be held to ensure that continuous production is possible should delivery delays occur or output increase

Question 4

Define Re-order quantity

Answer 4

number of units ordered each time

Question 5

Define lead time

Answer 5

the time between ordering new supplies and their delivery

Question 6

Define Re-order level

Answer 6

the level of inventory that triggers a new order to be sent to suppliers

Question 7

Define supply chain

Answer 7

the network of all the businesses and activities involved in creating a product for sale, starting with the delivery of raw materials and finishing with the delivery of the finished product

Question 8

Define supply chain management

Answer 8

handling the entire production flow of a product to minimise costs but improve customer service

Question 9

Define Just-in-time inventory management

Answer 9

Aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order

Question 10

Define Just-in-case inventory management

Answer 10

aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels