SCM Exam 2 Flashcards

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the bullwhip effect says that

the farther upstream the supply chain, the greater the impact of a small disturbance downstream


Companies hold hedge inventory due to:

uncertainty in supply or demand


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



Mr. Drucker uses a periodic review system to manage the inventory in his dry goods store. he likes to maintain 15 sacks of sugar on his shelves based on the annual demand figure of 225 sacks. it costs $2 to place an order for sugar and costs $1 to hold a sack in inventory for a year. Mr. Drucker checks inventory one day and notes that he is down to 9 sacks; how much should he order?

6 sacks


"A system used when demand occurs in only a single point in time" is the definition of

single-period inventory systems


You order a box of pencils from an office supply store and use them one-by-one until they are all gone. The pencils in your possession are

cycle stock


Which of these is NOT an assumption of the basic continuous review model?

The order quantity is constant, regardless of the demand


The R&H mercantile tracks the use of the boxes of macaroni and cheese (using a periodic inventory system) and has concluded that demand during lead time is normally distributed with a mean of 60 boxes and a standard deviation of 24 boxes. R&H mercantile has been using 91 as a reorder point. What is the likelyhood that they will run out of inventory before the next shipment arrives?

about 10%


the type of demand which is tie to the production of another item (table legs are an example) is



A computer manufacturer receives 20,000 computer mice in bulk from an upstream supplier, gravity uses them up over time, then receives another bulk shipment of 20,000 computer mice. This type of inventory is

cycle stock


Some companies want their supply chain partners (suppliers) to co-locate, ie move as close as possible to them. This would reduce

transportation inventory


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



A men's suit is composed of primary material, lining, thread, buttons, and a zipper. Which of these statements is best?

Suit zippers are dependent demand items


The cost an 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


"The Distortion of customer demand information moving upstream in the supply chain is known as

the bullwhip effect


The owner of a PMEX gas station checks the inventory level of gasoline constantly throughout the day so that he can reorder product when his inventory level falls 200 gallons.

continuous review system


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

Will have less safety stock inventory than a periodic review model


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