LECUTURE 5 - part 2

Question 1

Inventory (definition)

Answer 1

stocks or items used to support production, supporting activities and customer service

Question 2

Inventory management (definition)

Answer 2

the process of ordering, storing, using and selling a company’s inventory. This includes the management of raw materials, components, and finished proudcts, as well as warehousing and processing of such items

Question 3

Inventory types (6)

Answer 3

• Cycle stock
• Safety stock
• Anticipation inventory
• Hedge inventory
• Transportation inventory
• Smoothing inventory

Question 4

Cycle stock (definition)

Answer 4

the portion of inventory that a seller cycles through to fulfill regular sales orders

Question 5

Safety stock (definition)

Answer 5

extra inventory that companies hold to protect themselves against uncertainties in either demand levels or replenishment time

Question 6

Anticipation inventory

Answer 6

inventory that is held in anticipation of the customer demand. It allows instant availability when customers want them

Question 7

Hedge inventory

Answer 7

Form of inventory buildup to buffer against some events thay may not happen. Involve speculation related to potential labor strikes, price increases, unsettled governments etc.

Question 8

Transportation inventory

Answer 8

inventory that is moving from one link in the supply chain to another. Inventory that is ‘‘in the pipeline’’

Question 9

Smoothing inventory

Answer 9

inventory that is used to smooth out differences between upsream production levels and downstream demand

Question 10

Inventory drivers (definition)
(2)

Answer 10

business conditions that force companies to hold inventory

• supply uncertainty
• demand uncertainty