5 Inventory Management Free Online FlashCards

What does inventory management balance?

Inventory management sets how much stock to hold, where to hold it, and when and how much to replenish. It balances availability against ordering, storage, handling, and shortage costs.

What is cycle stock?

Cycle stock covers normal demand between replenishment orders. Larger, less frequent orders generally increase cycle stock.

How is inventory position calculated?

Inventory position = on-hand inventory + on-order inventory − backorders. It accounts for stock on hand, expected stock, and customer commitments.

How does a continuous-review $(s,Q)$ policy trigger an order?

In a continuous-review $(s,Q)$ policy, order a fixed quantity $Q$ when inventory position reaches or falls below reorder point $s$.

How is the reorder point determined?

Reorder point = expected demand during lead time + safety stock. It covers expected lead-time demand plus a buffer.

What is the safety-stock formula for fixed lead time?

With normally distributed, independent demand and fixed lead time, safety stock = $z \times \sigma \times \sqrt{L}$. This simple formula does not account for variable lead time.

How do cycle service level and fill rate differ?

Cycle service level is the probability of avoiding a stockout during a replenishment cycle. Fill rate is the share of total demand supplied immediately from available stock.

How does ABC analysis guide inventory control?

ABC analysis groups items by a chosen importance measure, often annual usage value. A items receive tighter monitoring, but low-value items may still be critical.

What should happen when cycle counts reveal discrepancies?

Cycle counting checks inventory regularly. Investigating discrepancies helps find their causes instead of merely adjusting recorded balances.

What uncertainty does safety stock protect against?

Safety stock is a buffer against uncertain demand or replenishment lead time.

When is anticipation stock built?

Anticipation stock is built ahead of expected peaks, such as seasonal demand or a planned shutdown.

What is pipeline stock?

Pipeline stock is inventory in transit or otherwise moving through the supply chain.