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SCM 3301 > EXAM 3 > Flashcards

EXAM 3 Flashcards

1
Q

6 Types of Inventory

A
  1. Cycle Stock (Inventory) 2. Safety Stock (Inventory) 3. Anticipation Inventory 4. Hedge Inventory 5. Transportation (or Pipeline) Inventory 6. Smoothing (or Buffer) Inventory
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2
Q

Components or products that are received in bulk by a downstream partner, gradually used up, and then replenished again in bulk by an upstream partner.

A

CYCLE STOCK or CYCLE INVENTORY

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3
Q

§Extra inventory that a company holds to protect itself against uncertainties in either demand or replenishment time.

A

SAFETY STOCK or SAFETY INVENTORY

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4
Q

Inventory that is held in anticipation of customer demand, allowing instant availability of items when customers want them. For example: creating finished goods in advance of a major sport event.

A

§Anticipation Inventory –

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5
Q

A form of inventory buildup to buffer against some event that is speculated to happen. For example: in advance of a hurricane.

A

§Hedge Inventory –

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6
Q

Inventory that is moving from one link of the supply chain to another. For example: raw materials that have been ordered but have not yet arrived.

A

§Transportation (Pipeline) Inventory –

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7
Q

Inventory that is used to smooth out differences between and fluctuations of upstream production rates and downstream demand rates.

A

§Smoothing (Buffer) Inventory –

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8
Q

4 Forces to Increase or Hold Inventory

A
  • Supply Uncertainty
  • Purchase Discounts
  • Production Uncertainty
  • Demand Uncertainty
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9
Q

The risk of interruptions in the flow of components/materials from upstream suppliers; unreliable supply management.

A

•Supply Uncertainty:

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10
Q

Purchasing extra inventory to receive a price discount or transportation discount. For example: 10% discount if you buy a truckload.

A

•Purchase Discounts–

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11
Q

The risk of interruptions in the flow of production due to unreliable or highly variable process outcomes; unreliable productivity & quality.

A

•Production Uncertainty:

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12
Q

The risk of significant and unpredictable fluctuations in downstream demand; unreliable forecasting.

A

•Demand Uncertainty:

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13
Q

4 Forces to Decrease Inventory

A
  • Tied Up Cash
  • Additional Related Purchases
  • Additional Non-Productive Activity
  • Opportunity for Mistakes
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14
Q

There is an “opportunity cost” when we choose to have money in inventory instead of productive activities that generate Return on Investment

A

•Tied Up Cash:

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15
Q

The more we spend on inventory, the more we MUST spend on storage shelving, racks, floor space, building space, warehouses, material handling, inventory management, insurance, taxes, heating, cooling, workers, management

A

•Additional Related Purchases:

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16
Q

More inventory means more movement of materials, repackaging of materials, reconfiguration of storage locations

A

•Additional Non-Productive Activity:

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17
Q

More inventory sitting for longer periods of time present more opportunities for damage, errors, rework, theft, obsolescence

A

•Opportunity for Mistakes:

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18
Q

Inventory items whose demand levels are beyond a company’s complete control.

§Example: Finished Goods

A

§Independent demand inventory –

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19
Q

Inventory items whose demand levels are tied directly to a company’s planned production of another item.

Example: Materials and Sub-Assemblies needed to create Finished Goods

A

§Dependent demand inventory –

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20
Q

§An inventory system that is used to manage independent demand inventory (Finished Goods).

A

Periodic Review Systems

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21
Q

(MRL) STANDS FOR

A

minimum restocking level

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22
Q

§An inventory system used to manage independent demand inventory where the inventory level for an item is constantly monitored and when a predetermined reorder point is reached, an order is released.

A

CONTINUOUS REVIEW SYSTEM

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23
Q

H

A

Holding Cost Per Year Per Unit

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24
Q

S

A

Ordering/Setup Cost Per Order

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25
Q

D

A

Demand Rate per Year

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26
Q

•When Demand ___, Economic Order Quantity Increases

A

INCREASES

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27
Q

•When Demand INCREASES, Economic Order Quantity___

A

Increases

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28
Q

•When Holding Costs ___, Economic Order Quantity Decreases

A

INCREASE

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29
Q

•When Holding Costs INCREASE, Economic Order Quantity ___

A

Decreases

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30
Q

•When Holding Costs ___, Economic Order Quantity Increases

A

DECREASE

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31
Q

•When Holding Costs DECREASE, Economic Order Quantity ___

A

Increases

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32
Q

•When Ordering or Setup Costs ___, Economic Order Quantity Increases

A

INCREASE

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33
Q

•When Ordering or Setup Costs INCREASE, Economic Order Quantity ___

A

Increases

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34
Q

•When Ordering or Setup Costs ___, Economic Order Quantity Decreases

A

DECREASE

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35
Q

•When Ordering or Setup Costs DECREASE, Economic Order Quantity ___

A

Decreases

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36
Q

ROP STANDS FOR

A

Reorder Point,

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37
Q

CYCLE STOCK Reorder Point, ROP

A
38
Q

CYCLE STOCK Total Annual Inventory Cost FORMULA

A
39
Q

Economic Order Quantity, EOQ =

A
40
Q

(EOQ) STANDS FOR

A

economic order quantity

41
Q

EOQ occurs when Holding Cost =

A

Ordering Cost

42
Q

___ occurs when Holding Cost = Ordering Cost

A

EOQ

43
Q

EOQ occurs when ___ = Ordering Cost

A

Holding Cost

44
Q

TBO STANDS FOR

A

Time Between Orders

45
Q

Time Between Orders (TBO) =

A
46
Q

FORMULA TO CALCULATE Z

A
47
Q

SERVICE LEVEL FORMULA

A
48
Q

§The decision of how much safety stock to hold depends on five factors:

A

§The variability of demand

§The average length of lead time

§The average demand

§The desired service level

§The variability of lead time

49
Q

SAFETY STOCK FORMULA

A
50
Q

SAFETY STOCK REORDER POINT, ROP FORMULA

A
51
Q

SAFETY STOCK Total Annual Inventory Cost FORMULA

A
52
Q

SAFETY STOCK Average Inventory Level FORMULA

A
53
Q

z =

A

Number of Standard deviations corresponding to a service level

54
Q

a method of producing, transporting, and storing inventory that is based upon anticipating (forecasting) supply and demand and optimizing production capabilities.

A

§A Push System

55
Q

An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. This creates excessive inventory throughout the supply chain.

A

§Bullwhip Effect

56
Q

Deciding where in the supply chain to hold inventory.

A

§Inventory Positioning

57
Q

Holding safety stock in a single location instead of multiple locations.

A

§Geographic Inventory Pooling –

58
Q

Holding partially assembled components that can be configured in various ways.

A

§Postponement –

59
Q

Shipment made with no stops

A

§Direct truck –

60
Q

Smaller shipment combined with other loads

A

§Less than truckload (LTL) –

61
Q

§Two railroad carrier types:

A

§Linehaul freight carriers

§Shortline carriers

62
Q

2 types of air cargo carriers

A

§Combination carriers (people and goods)

§Air cargo carriers

63
Q

2 types of ship Mass movement of bulk commodities

A

§Low-valued (domestic shipment)

§High-valued (international shipment)

64
Q

•Truckload carriers > ___ lbs

A

15,000

65
Q

•Less-than-truckload (LTL) – ___lbs

A

150 to 15,000

66
Q

2 types of trucking ownership

A
  1. for hire
  2. private fleet
67
Q

•Small package carriers up to ___ lbs

A

•Small package carriers up to 150 lbs

68
Q

§Three primary types of pipelines

A

§Gathering lines

§Trunk lines

§Refined product pipelines

69
Q

the blend of liquids that occurs at the interface of two different liquids

A

§Transmix –

70
Q

transportation service provider that does not require long-term agreements or contracts

A

•Common Carriers –

71
Q

transportation service providers negotiated for long-term agreements or contracts

A

•Contract Carriers –

72
Q

a service firm that negotiates and coordinates all logistics services

A

•3PL (Third Party Logistics) –

73
Q

smaller pipelines to bring crude into a plan

A

§Gathering lines

74
Q

long distance pipelines to final customer or distribution points

A

§Trunk lines

75
Q

•Buyer is responsible for all costs until item is received

A

§Free-on-board or Freight-on-board (FOB) Origin:

76
Q

(FOB)

A

Free On Board

77
Q

•Seller is responsible for all costs until item reaches its destination

A

§FOB Destination

78
Q

§originates the shipment

§provides all the information the carrier needs to deliver the item

§stipulates the contract terms, including carrier’s liability for loss and damage

§acts as a receipt for the goods the shipper tenders to the carrier

§in some cases, shows certificate of title to the goods

A

§Bill of Lading

79
Q

§Shipment Description

§Origin and Destination

§FOB

§Total Weight

§Total Charges

A

§Freight Bill: Carrier’s invoice for carrier charges includes

80
Q

§Documenting claims of Loss, Damage & Delay

§Documents costs and reimbursement of these claims

A

§Freight Claims For

81
Q

A form of warehousing that pulls together shipments from a number of sources in the same geographic area and combines them into larger and more economical loads

A

§Consolidation warehousing –

82
Q

A form of warehousing in which large incoming shipments are received and then broken down into smaller outgoing shipments to demand points in a geographic area

A

§Cross-docking –

83
Q

Incoming sources are from a single source or manufacturer.

A

§Break-bulk warehousing –

84
Q

A form of warehousing in which strategically placed hubs are used as sorting or transfer facilities

A

§Hub-and-spoke system –

85
Q

A form of warehousing that combines classic warehouse operations with light manufacturing and packaging duties to allow firms to put off final assembly or packaging of goods until the last possible moment

A

§Postponement warehousing –

86
Q

A form of warehousing in which a wide array of goods is held close to the source of demand in order to assure short customer lead times

A

§Assortment warehouses –

87
Q

A form of warehousing that attempts to position seasonal goods close to the marketplace

A

§Spot stock warehouses –

88
Q

involves consolidating safety stock for stores into one centralized location to provide same-day service to any store as needed

A

§Inventory Pooling

89
Q

A system that includes the equipment and procedures needed to move goods within a facility, between a facility and a transportation mode, and between different transportation modes

A

§Material handling system –

90
Q

The way goods and materials are packed in order to facilitate physical, informational, and monetary flows through the supply chain

A

§Packaging –

91
Q

A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

A

§Reverse logistics system –

92
Q

A logistics decision modeling technique that attempts to identify the “best” location for a single warehouse, store, or plant given multiple demand points that differ in location and importance.

A

§Weighted center of gravity method –

SCM 3301 (3 decks)

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