Q3 SCM Flashcards

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A company which produces​ electricity, like Progress​ Energy, is considering buying extra coal to hold in inventory. They want to buffer against a potential strike at a major coal producer which would likely result in a significant price increase.



Companies hold safety stock inventory due to

uncertainty in supply or demand.


​"Any idle resource held for future use dash– those stocks or items used to support production​ (raw materials), supporting activities​ (drill bits) and customer service​ (finished goods, spare​ parts)"



A​ men's suit is composed of primary​ material, lining,​ thread, buttons, and a zipper. A zipper is an

Dependent Demand item


The cost and value of inventory increase as materials move down the supply chain. One way operations and supply chain managers counteract the negative aspect of this fact is by

inventory pooling.


Not an remedy for the Bullwhip effect

Offering large volume price discounts to distributors and retailers.


The owner of a vending machine company has weekly stops to check the soda machine at NC State. She checks the inventory levels and fills the machine back up to its full restocking level.She is using which of the following types of independent demand inventory​ systems?

periodic review system


Which of the following is a characteristic of the Continuous Review Model for inventory​ management?

Will have less safety stock inventory than a periodic review model


Franklin BBQ is open 7 days per week. Joe Bob reorders pickles every Monday for delivery on Wednesday. Average daily demand is 10 gallons with a standard deviation of 2 gallons per day. What is the standard deviation of demand for pickles during the review period plus the lead time​ (e.g., uncertainty​ period)? (Select the nearest​ number)



Franklin BBQ operates 50 weeks per year. Weekly demand averages 30 beef briskets per week with a standard deviation of 6 briskets. Ordering costs are​ $25 and annual inventory holding cost is​ $4 per brisket.  Delivery lead time from the vendor is 2 weeks.  How many briskets should Joe Bob order to minimize his​ costs? ​ (Select the nearest​ number)

137 briskets


Silly Sally sells sea shells at the Sea Shore Store. The average and standard deviation of demand during replenishment lead time is 60 and 10​ units, respectively. Sally sipped Sangria at the Silver Spoon Saloon and forgot to place a replenishment order. If Sally places an order at the end today when she has 65 units on​ hand, what is the probability she​ doesn't run out of sea shells before the replenishment​ arrives?



Guadalupe sells imported watches from Germany on his​ e-commerce website. He wants to determine the Economic Order Quantity for his best selling watch. Which of the factors below is not relevant to this​ decision?

Replenishment lead time.


​Hart's Floral Shop sells bouquets for special occasions. Annual demand is 500​ bouquets, the​ company's cost to place an order with its vendor is​ $25, and the cost to hold a bouquet in inventory for a year is​ $15. If Hart orders from its vendor in quantities of 45​ bouquets, what is the total annual inventory holding​ cost? Choose the closest number.



Diamond Hardware Store sells​ picture-hanging kits. Annual demand is​ 4,000 kits. The cost to place an order from​ Diamond's vendor is​ $50 and the holding cost is​ $10 per kit per year. If diamond orders in quantities less than 150​ units, each kit costs​ $2.00. If orders are between 150 and 249​units, each kit costs​ $1.75. If diamond orders greater than 250​ units, the price is​ $1.50 per kit. How many kits should Diamond order to minimize​ costs?



Assume the standard deviation of demand per week is 8 units and replenishment lead time is 4 weeks. What is the standard deviation of demand during lead​ time?

16 units


In 2014​ Wal-Mart Stores held​ $43,858 million dollars of inventory. Annual inventory holding costs are approximately​ 25% of item value. Assume that during your summer​ internship, you invented an improved forecasting model that reduced​ Wal-Mart's inventory level by​ 1% without lowering the service level. How much would this save​ Wal-Mart each​ year? (Pick the closest​ number)

​$109.645 million


Which of the following is not a component of inventory holding​ cost?

Sales expenses on inventory


On December​ 31, 2014​ Wal-Mart Stores reported total 2014 revenues of​ $476,294,000,000. On hand inventory was​ $43,858,000,000 and total assets were​ $204,751,000,000. What was the inventory turnover for​ 2014? ​ (Pick the closest​ number)

10.9 turns


Mertle Mouse sells Swiss cheese gift sets at the airport. She buys the gift sets from a supplier in Wisconsin. The average and standard deviation of demand during replenishment lead time are 45 and 15​ units, respectively. What would be the reorder point for a​ 97% probability of not stocking out during replenishment lead​ time? ​ (Select the closest​ number.)

73 units


What is the Z value for an​ 85% service​ level?



Some companies want their supply chain partners (suppliers) to co-locate, i.e., move as

close as possible to them. This would reduce

Transportation Inventory


The type of demand which comes from outside the organization, is unpredictable, and

usually forecasted is