Supply Chain Management Study Set 2

Inventory is defined as the stock of any item or resource used in an organization.

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.

In inventory models, high holding costs tend to favor high inventory levels.

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

If the cost to change from producing one product to producing another were zero the lot size would be very small.

Shortage costs are precise and easy to measure.

Inventory levels of dependent demand items are usually managed by calculations using calculus-driven, cost-minimizing models.

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

Fixed-order quantity inventory models are "event triggered."

Fixed-order quantity inventory models are "time triggered."

Fixed-time period inventory models are "event triggered."

Fixed-time period inventory models are "time triggered."

Fixed-order quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.