Topic 13

Question 1

Inventory held to take advantage of scale economies

Answer 1

Cycle inventory

Question 2

Inventory that flows between activities in a process

Answer 2

Pipeline Inventory

Question 3

Inventory built up in advance of high future demand

Answer 3

Anticipation Inventory

Question 4

The number of times inventory is sold or used in a time period

Answer 4

Inventory Turnover

Question 5

Measure of product availability

Answer 5

Fill Rate

Question 6

Measure of how much time before running out of inventory

Answer 6

Days of Inventory Supply

Question 7

Cost to store 1 unit of inventory per period

Answer 7

Inventory Holding Cost

Question 8

Cost to place an order

Answer 8

Order Cost

Question 9

Sum of annual order cost + annual holding cost

Answer 9

Total Annual Inventory Cost

Question 10

Demand that occurs in the time between planning + receiving an order

Answer 10

Demand during Lead Time

Question 11

Desired probability of being able to meet demand from inventory

Answer 11

Cycle Service Level

Question 12

Inventory of finished products that are directly sold to customers; their demand is not dependent on the demand for another item within the production process

Answer 12

Independent Demand Inventory

Question 13

Its purpose is to determine optimal order quantity that minimizes total cost and balances ordering costs and inventory holding costs

Answer 13

Economic Order Quantity (EOQ)

Question 14

Carrying the right items in the right quantities at the right times

Answer 14

Proactive Inventory Mangement