Inventory Management

Question 1

Inventory

Answer 1

Materials and goods held by a business and required to allow for the production of products and their supply to the customer.

Question 2

Inventory management

Answer 2

The process of ordering, storing and using a company’s inventory.

Question 3

Economic order quantity

Answer 3

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

Question 4

Buffer inventory

Answer 4

Minimum inventory level that should be held to ensure that continuous production is possible should delivery delays occur or output increase.

Question 5

Re-order quantity

Answer 5

Number of units ordered each time.

Question 6

Lead time

Answer 6

The time between ordering new supplies and their delivery.

Question 7

Re-order level

Answer 7

The level of inventory that triggers a new order to be sent to suppliers.

Question 8

Supply chain

Answer 8

The network of all the businesses and activities involved in creating a product for sale, starting with the delivery of raw materials and finishing with the delivery of the finished product.

Question 9

Supply chain management

Answer 9

Handling the entire production flow of a product (from raw materials to finished product) to minimise costs but improve customer service.

Question 10

Just-in-time (JIT) inventory management

Answer 10

Aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order.

Question 11

Just-in-case (JIC) inventory management

Answer 11

Aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels.