CHAPTER 2

Question 1

Which are th functions of inventories?

Answer 1

• buffering the mismatch between supply and demand
• keeping and safeguarding goods.
• protection/ safety to satisfy demand
• speculation to benefit from price fluctuations
• cost optimisation to exploit economies of scale
• production in processes that require the product not to be touched (wine)

Question 2

Components of inventory decisions:

Answer 2

• cycle inventory
• safety inventory
• seasonal inventory
• level of product availability

Question 3

Must have for cycle inventory

Answer 3

• continuous review (order when inventory declines to reorder point)
• periodic review (order to raise inventory level to a specific limit)

Question 4

Name the different delivery types

Answer 4

• traditional supplier process
• supplier warehouse process
• Just in time process

Question 5

Parts of the cycle inventory and advantage

Answer 5

• lot size (lo que purchase o produces)
• cycle inventory (average of whole inventory)
• take advantage of economies of scale
• reduce cost in supply chain

Question 6

Write the formula for cycle inventory

Answer 6

I=DT

Question 7

How to calculate the optimal lot size

Answer 7

Q^2=2DS/hC

Question 8

Calculate optimal order frequency

Answer 8

N^2=DhC/2S

Question 9

What is multiechelon cycle inventory?

Answer 9

This chains have multiple stages with many possible players at each stage
- its goal is to decrease total costs by coordinating orders across the supply chain

Question 10

What is the problem if we calculate the lot size wrongly

Answer 10

• high costs

- more cycle inventory than required

Question 11

Why do we need safety inventories?

Answer 11

• satisfy the demand that exceeds the amount forecasted
• demand fluctuations
• inventory fluctuations
• deviations in delivery dates
• deviations in delivery amounts

Question 12

What is the cycle service level

Answer 12

The probability that the demand during lead time (nº weeks) never is bigger than the reorder point

Question 13

What is the fill rate? (Product and order)

Answer 13

• PRODUCT FILL RATE: part from product demand that is satisfied with products from the inventory.
• ORDER FILL RATE: part of the orders filled form available inventory

Fr= (expected demand- expected shortage)/ expected demand

Question 14

Positive impacts of safety inventory

Answer 14

• information centralisation
• warehouse specialisation
• product substitution
• improved inventory visibility