OPS MODULE 8 Flashcards
____ is a stock or store of goods
Inventory
______ are items that are ready to be sold or used
Independent demand items
______ are vital part of business since it is necessary for operations and contributes to customer satisfaction
Inventories
A “typical” firm has roughly ___% of its current assets and as much of __% of its working capital invested in inventory
30 ; 90
T or F: The following are the types of items:
- Raw materials and purchased parts
- Work-in-process (WIP)
- Finished goods inventories or merchandise
- Tools and supplies
- Maintenance and repairs (MRO) inventory
- Goods-in-transit to warehouse or customers (pipeline inventory)
False (inventory not items)
Inventory Functions:
- To meet anticipated customer demand
- To smooth ______ requirements
- To _____ decouple
- To protect against ______
production ; decouple ; stockouts
Inventory Functions:
- To take advantage of ____ cycles
- To hedge against ____ increases
- To _____ operations
- To take advantage of quantity _____
order ; price ; permit ; discounts
Level of Customer Service
Having the right ____ available in the right ____ in the right ____ at the right time _____
goods ; quantity ; place ; time
The overall objective of inventory management is to achieve satisfactory levels of _______ while keeping ______ within reasonable bounds
- Measure of Performance
- Customer Satisfaction (no. and qty. of backorders & customer complaints)
- Inventory Turnover
customer service ; inventory costs
Effective Inventory Management required:
1. A _____ keep track of inventory
2. A reliable _____ of demand
3. Knowledge of ______ and lead time variability
4. Reasonably estimates of (state the three costs)
5. A _____ system for inventory items
-system
-forecast
-lead time
-holding, ordering, and shortage costs
-classification
____ is a physical count of items in inventory made at periodic intervals
Periodic System
______ system that keeps track of removals from inventory continuously, thus monitoring current levels of each item
Perpetual inventory system
An order is placed when inventory drops to a predetermined minimum level
_______ is two containers of inventory ; reorder when the first is empty
Two-bin system
Bar code printed on a label that has information about the item to which it is attached
Universal product code (UPC)
A technology that uses radio waves to identify objects, such as goods, in supply chains
Radio Frequency Identification Tags (RFID)
Inventory Costs:
______ ; amount to buy the inventory
Holding (carrying) cost ; cost to carry an item in inventory for a length of time, usually a _____
________ ; costs of ordering and receiving inventory
Setup costs ; the costs involved in preparing equipment for a job and _____ to ordering costs
______ ; costs resulting when demand exceeds the supply of inventory and often unrealized profit per unit
-purchase cost
-year
-ordering costs
-analogous
-shortage costs
Approach that involves classifying inventory according to some measure of importance, and allocating control efforts accordingly
A-B-C Approach
__ items ; very important
__ items ; moderately important
__ items ; least important
A
B
C
A items ; ___ to ___ percent of the number of items in inventory and about ___ to ___ percent of the annual dollar value
10 to 20
60 to 70
C items ; __ to __ percent of the number of items in inventory but only about __ to __ percent of the annual dollar value
50 to 60
10 to 15
