Inventory Control Flashcards
What is inventory control?
Explain how it works starting with tracking stock levels…
The process of
tracking stock levels
while monitoring customer demand
To have exactly what you need to sell.
to ensure right products are available
at the right time
in correct quantities
What is the main difference between inventory control and inventory management?
OMI wants both Inventory control
and inventory management
Inventory control
regulates what is already in the warehouse
while inventory management
regulates everything from
warehouse stock to
procurement
and final destination (where it’s going)
What are the four main types of inventory?
Raw components,
WIP (work in progress),
Whole servers,
and MRO (maintenance, repair, and operation supplies)
What is a periodic inventory system?
A system that relies on
occasional physical counts of inventory
rather than continuous tracking
What is a perpetual inventory system?
A system that
continuously and immediately updates inventory numbers
based on sales and purchases
via point of sale
and asset management software
What are the main disadvantages of a periodic inventory system?
Business activities must be suspended during counting,
requires significant manual labor,
higher risk of fraud due to lack of continuous tracking
What is the FIFO method?
First-in-first-out assumes goods first added to inventory will be first sold
What is the LIFO method?
Last-in-first-out assumes goods last added to inventory are first to be sold
What is Min-Max Inventory Control?
A theory setting minimum and maximum levels of stock
for specific items,
ordering only enough to reach maximum
when minimum is hit
Depending on how much money it costs, I think this might be the best strategy for OMI until we get an automated system with better estimations on demand.
The problem is it takes so much longer to actually order hardware that doing it any other way probably just means long wait times for the customer unless we do it this way. We’d be carrying a little bit more hardware on hand but that could unlock better conversion for sales if the product is readily available
What is JIT Inventory?
I THINK this is what OMI do rn.
Just-in-time inventory aligns
raw material orders from suppliers
with production schedule
to minimize waste and storage costs
What are key ways to secure high-value inventory?
install CCTV surveillance,
place items in high-visibility areas
secure deliveries immediately,
Use RFID tags,
What is the role of RFID in inventory control?
RFID tags contain electronically stored information,
can be active or passive,
and help track / secure inventory items
Why is it important to separate inventory control duties?
(Confirm OMI have someone monitoring finances, likely Todd since he’s purchasing now)
At OMI they may want to merge them. I’ll warn this would work for me in this role, but should that ever change, only a highly honest and trustworthy individual be considered for the role.
To prevent theft and fraud -
staff who oversee stock
should not monitor financial records
What is the purpose of inventory control software?
To provide
- track sales and purchases,
- automate inventory management processes
- item-level visibility,
- generate reports,
What are important features to look for in inventory control software?
Inventory optimization parameters,
tracking tools,
automated replenishment,
lead time management,
safety stock calculations
Side note: SM have AI inventory control support hardware:
https://www.supermicro.com/en/solutions/ai/retail
What is the stock-to-sales ratio formula?
(Beginning of month stock) / (the month’s sales)
What is the sell-through rate (STR) formula?
(Sales) / (by beginning of month on-hand inventory) x 100
What is LIFR and how is it calculated?
Line Item Fill Rate =
(Number of items fulfilled) / (total number of items ordered) x 100
What are key elements of an inventory control SOP?
Creating OMI wiki entries and templates for these:
shipping procedures
Receiving goods / supplies,
tracking/
storage,
inspection dates / rotation,
security,
What is ABC Analysis in inventory control?
Method of dividing inventory into three groups:
A (high value, low frequency),
B (moderate value/frequency),
C (low value, high frequency)
What is the ROP formula?
Reorder Point =
(Lead Time Demand) + (Safety Stock)
What is EOQ and its formula?
Economic Order Quantity =
Square root of (2DS/H)
where
D=demand,
S=order cost,
H=holding cost
What’s the value in using ABC inventory classification?
ABC inventory classification helps you sort items in your inventory according to their
annual consumption value
(a.k.a. the amount of profit you make per item sold).
This allows you to prioritize inventory management tasks based on their value to your company,
since items in category A have a more significant effect on your bottom line
compared to items in category B or category C.
