Chapter 24: Inventory Managment

Question 1

Define Inventory (stock)

Answer 1

Inventory (stock): materials and goods required to allow for the production and supply of products to the customer.

Question 2

Define economic order quantity

Answer 2

Economic order quantity: the optimum or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs.

Question 3

Define Re-order quantity

Answer 3

Re-order quantity: the number of units ordered each time.

Question 4

Define lead time

Answer 4

Lead time: the normal time taken between ordering new stocks and their delivery.

Question 5

Define buffer inventories

Answer 5

Buffer inventories: the minimum inventory level that should be held to ensure that production could still take place should a delay in delivery occur or should production rates increase.

Question 6

Define just-in-time

Answer 6

Just-in-time: this inventory-control method aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order.