E3, Ch 20: Inventory Flashcards

1
Q

inventory =

A

cash

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2
Q

inventory is the _______ _____ on a company’s balance sheet, but try not to have ___ ____ inventory sitting.

A

largest asset,
too much

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3
Q

work in process inventory

A

materials scheduled or currently in production

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4
Q

supplies inventory

A

parts or materials used to support the production process but not usually part of the product

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5
Q

transportation/pipeline inventory

A

inventory in transit

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6
Q

quantity discount model

A

a discount offered in price for ordering above a specific amount (bulk buying)

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7
Q

transportation discounts

A

discounts offered on shipping costs for ordering above a specific amount

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8
Q

revenue sharing

A

strategic alliance formed so both parties benefit from the product/service
ex. Netflix partnering with production companies to share revenue

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9
Q

reorder point – what is it, what is it based on

A

numerical pointassigned to product indicating when it should be ordered again
based on lead time

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10
Q

safety stock

A

inventory to protect against unexpected demand

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11
Q

periodic inventory system

A

more of a manual system, best for small businesses
requires a physical count; inexpensive and low-maintenancee

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12
Q

perpetual inventory system

A

what most businesses use; automatic/real-time tracking

continuous monitoring requiring inputs (ex. barcode scanning)

expensive and high maintenance but very accurate

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13
Q

economic order quantity (4)

A
  • used for finished goods
  • one product involved
  • demand requirements are known
  • demand is spread evenly throughout year
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14
Q

economic production quantity (4)

A
  • used for raw materials or production
  • one item involved
  • product rate constant
  • lead time does not vary
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15
Q

holding/carrying cost

A

cost of having inventory that is not selling
broad; including things like storage facilities, taxes, depreciation, insurance…

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16
Q

setup/production costs

A

cost of setups, filling out paperwork, properly charging time and materials, etc.

17
Q

replacement parts inventory

A

maintained to replace other parts in machinery as parts wear out

18
Q

goal os EOQ and EPQ is to minimize….

A

total annual cost of ordering, set-up, shortage, and holding inventory

19
Q

high holding costs tend to favor low…….. and frequent………..

A

inventory levels;
replenishment

20
Q

ordering costs

A

managerial/clerical costs to prepare the order
ex. counting items and calculating order quantities

21
Q

shortage costs

A

when stock of an item is depleted, an order must wait until stock is replenished or cancelled

22
Q

minimum order quantity

A

based on your order quantity there tends to be fees from the supplier based on how much you order

if you order a smaller amount the fees are generally larger

23
Q

stockout

A

when demand is not met and order is canceled

24
Q

backorder

A

when order is held and filled at a later date

25
Q

inventory turns

A

ratio measures how efficiently a company uses its inventory

useful for comparing similar companies, more beneficial for retailers

26
Q

ABC classification

A

A= high dollar, 80% total value
B= moderate dollar value, 15% total value
C= low dollar, 5% total value

27
Q

pareto principle

A

80/20 rule, is the idea that 80% of outcomes are the result of 20% of causes

28
Q

inventory accuracy

A

how well inventory records agree with physical count

29
Q

cycle counting

A

physical inventory-taking technique where inventory is counted on a frequent basis rather than once or twice a year