Chapter 12 Flashcards

1
Q

Amazon.com started as a ____ retailer- no inventory, no warehouses, no overhead. Just computers taking orders to be filled by others.

A

Virtual

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2
Q

Growth has forced Amazon.com to become a world leader in warehousing and ______ management

A

Inventory

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3
Q

The objective of inventory management is to

A

Strike a balance between inventory investment and customer service.

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4
Q

One of the most expensive assets of many companies representing as much as __% of total invested capital.

A

50

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5
Q

Less inventory lowers ____ but increases chances of ____ ____

A

Cost; running out

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6
Q

More inventory ____ costs but always keeps customers happy.

A

Raises

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7
Q

4 functions of inventory:
1. To provide a selection of goods for ____ demand and to separate the firm from fluctuations in _____

  1. To decouple or separate various parts of the ____ process.
A

Anticipated, demand. Production process

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8
Q

4 functions cont.
3. To take advantage of ____ discounts

  1. To hedge against ____
A

Quantity, inflation

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9
Q

4 types of inventory:

A

Raw material, work in process, maintenance/repair/operating (MRO), and finished goods.

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10
Q

Type of inventory that is purchased but not processed.

A

Raw materials

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11
Q

Type of inventory that has undergone some change but not completed. A function of cycle time for a product.

A

Work in process (WOP)

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12
Q

Type of inventory that is necessary to keep machinery and processes productive

A

Maintenance/repairing/operating (MRO)

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13
Q

Type of inventory that is a completed product awaiting shipment.

A

Finished goods.

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14
Q

The material flow cycle: input, wait for inspection, wait to be moved, move time, wait in queue for operator, and setup time counts for ___% of cycle time. ___% is run time and to output.

A

95, 5

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15
Q

Managing inventory involves 2 things:

  1. How inventory items can be _____ (ABC analysis)
  2. How accurate inventory records can be _____
A

Classified, maintained.

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16
Q

Divides inventory into three classes based on annual dollar volume. Used to establish policies that focus on the few critical parts and not the many trivial ones.

A

ABC analysis

17
Q

Class ___: high annual dollar volume

Class ___: medium annual dollar volume

Class ___: low annual dollar volume

18
Q

Other criteria than annual dollar volume may be used for ABC analysis:

High shortage or ___ cost
Anticipated engineering changes
Delivery problems
____ problems

A

Holding, quality.

19
Q

______ _____ are a critical ingredient in production and inventory systems.

A

Record accuracy

20
Q

____ ____ require regular checks of inventory which is also called a ___ ___ system.

A

Periodic systems. Two bin

21
Q

Perpetual inventory tracks receipts and subtractions on a ___ basis.

A

Continuing

22
Q

____and ____ record keeping must be accurate. Necessary to make precise decisions about ordering, scheduling and _____

A

Incoming and outgoing; shipping

23
Q

Items are counted and records updated on a periodic basis. Often used with ABC analysis.

A

Cycle counting

24
Q

Cycle counting has several advantages:

  1. Eliminates shutdowns and interruptions
  2. Eliminates annual ____ _____
  3. Trainee personnel audit inventory accuracy
  4. Allows causes of errors to be identified and corrected
  5. Maintains accurate inventory records
A

Inventory adjustment

25
Control of ____ inventories: - can be a critical component of profitability - losses may come from shrinkage or pilferage - applicable techniques include: 1. Good personnel selection, training and discipline. 2. Right control of incoming shipments 3. Effective control of all goods leaving facility
Service
26
The demand for item is independent of the demand for any other item in inventory
Independent demand
27
Demand for item is dependent upon the demand for some other item in the inventory.
Dependent demand
28
Costs of holding or “carrying” inventory over time
Holding costs
29
Costs of placing an order and receiving goods.
Ordering costs
30
Cost to prepare a machine or process for manufacturing an order
Setup cost
31
3 inventory models under independent demand: 1. Basic EOQ model 2. Production order ___ model 3. Quantity ____ model
Quantity
32
Important assumptions for EOQ model: 1. Demand is known, constant and independent. 2. Lead time is known and constant 3. Receipt of inventory is instantaneous and complete 4. Quantity discounts are not possible 5. Only _____ costs are setup and holding 6. Stockouts can be completely _____
Variable, avoided