Chapter 11 Flashcards
(20 cards)
Inventory
stocks or items used to support production and work in process items (raw mats, work in process) supporting activities (maintenance, repair, and operating supplies) and customer service (finished goods and spare parts)
Cycle stock inventory
components or products that are received in bulk by a downstream partner, gradually used up and then replenished. (active inventory)
Safety Stock
extra inventory companies hold to protect themselves against uncertainties in demand or replenishment time
Anticipation Inventory
Inventory that is held in anticipation of customer demand
Hedge Inventory
Inventory buildup to buffer against some event that may not happen.
transportation inventory
inventory that moves from one link in the supply chain to another.
smoothing inventory
smooths out differences between upstream production levels and downstream demand
inventory drivers
business conditions that force companies to hold inventory (supply uncertainty)
Demand uncertainty
risk of significant and unpredictable fluctuations in the demand for their products
independent demand inventory
inventory items whose demand level are beyond a company’s control. ex: kitchen tables
dependent demand inventory
inventory items whose demand level is directly tied to company’s planned production (very accurate) ex: kitchen table legs
periodic review system
inventory system used to check inventory at regular intervals and restocked to some predetermined level.
continuous review system
inventory level is constantly monitored, and when reorder point is reached, an order is released
service level
amount of demand to be me under conditions of demand and supply uncertainty
Economic order quantity (EOQ)
minimizes the holding and ordering costs for an item
single period inventory system
when excess inventory cannot be held in the future, firmst must weigh the cost of being short against the cost of excess units.
goals of single period inventory system
determine a larger service level that strikes the best balance between expected shortage costs and excess costs.
target service level/target stocking point
service level at which expected costs of a shortage equals expected cost of having excess units
bull whip effect
an extreme change in the supply position upstream in a supply chain, generated by a small change in demand downstream in supply chain
inventory positioning
cost and value increases and flexibility decreases down the supply chain.
