Inventory and Supply Chains Overview
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Questions and Answers

What does the Return on Assets (ROA) measure?

  • Cash flow statements only
  • The sales revenue of a company
  • Total liabilities against assets
  • Operating efficiency and profitability (correct)

    • Which of the following methods can improve cash flow?

  • Ignoring supplier payment timelines
  • Switching manufacturing to countries with strong exchange rates
  • Customers paying sooner and suppliers paid later (correct)
  • Increasing inventory levels unnecessarily

    • Which factor is NOT one of the six supply chain performance levers?

  • Demand
  • Inventory management (correct)
  • Lead times
  • Information

    • How is capital employed defined?

    <p>Total assets minus current liabilities</p> Signup and view all the answers

    What impact do supply chain decisions have on Return on Capital Employed (ROCE)?

    <p>They influence assets, costs, and sales</p> Signup and view all the answers

    Which of the following best describes the role of lead times in the supply chain?

    <p>They measure the speed of product delivery and responsiveness</p> Signup and view all the answers

    What is the purpose of the cash flow statement?

    <p>To show annual cash inflows and outflows</p> Signup and view all the answers

    Which strategy is NOT effective for improving supply chain performance?

    <p>Delaying customer orders</p> Signup and view all the answers

    Which phase in the product life-cycle requires building stock prior to launch due to uncertain demand?

    <p>Launch phase</p> Signup and view all the answers

    What is the primary purpose of product classification in demand and supply planning?

    <p>To segment the product portfolio based on turnover</p> Signup and view all the answers

    How is forecast accuracy (FA) measured?

    <p>FA equals one minus the error percentage</p> Signup and view all the answers

    In managing supply planning, what does the re-order point refer to?

    <p>The stock level that triggers a new order when it falls below a certain point</p> Signup and view all the answers

    Which forecasting method is based on historical patterns for statistical forecasting?

    <p>Time series method</p> Signup and view all the answers

    What aspect of demand planning is most influenced by patterns of demand?

    <p>Inventory management</p> Signup and view all the answers

    During which product life-cycle phase does demand monitoring become critical to maintain sufficient inventory levels?

    <p>Decline phase</p> Signup and view all the answers

    What defines the continuous review approach in order cycle management?

    <p>Stock levels are constantly monitored to place orders when necessary</p> Signup and view all the answers

    What is the primary focus of a lean supply chain?

    <p>To supply demand at the lowest cost</p> Signup and view all the answers

    Which statement best describes an agile supply chain?

    <p>It is designed to respond quickly to demand changes.</p> Signup and view all the answers

    What is the concept of postponement in supply chain management?

    <p>Delaying configuration until customer requirements are understood</p> Signup and view all the answers

    What does gearing measure in supply chain finance?

    <p>The extent of capital investment funded by debt</p> Signup and view all the answers

    Which component does NOT directly influence return rates?

    <p>Market share</p> Signup and view all the answers

    In the supply chain finance context, which scenario describes cash flow out?

    <p>Payment for supplier materials</p> Signup and view all the answers

    Which inventory strategy utilizes common platform principles for delayed configuration?

    <p>Postponement</p> Signup and view all the answers

    What occurs when a company goes bankrupt in terms of capital structure?

    <p>The bank assumes ownership of all company assets</p> Signup and view all the answers

    What does it mean for a supply chain to consider supply and demand as a combination of processes?

    <p>It allows for better synchronization and responsiveness.</p> Signup and view all the answers

    What is essential for a company to provide returns to both the bank and shareholders?

    <p>Generating sufficient cash flow from sales</p> Signup and view all the answers

    What is a key advantage of transporting more expensive goods?

    <p>Speed for long distances</p> Signup and view all the answers

    Which of the following is NOT a requirement for export packaging?

    <p>Costly packaging materials</p> Signup and view all the answers

    What should be considered for maintaining effective stock control during transport?

    <p>Type of packaging used</p> Signup and view all the answers

    What does material customs legislation require regarding goods?

    <p>A customs destination must be indicated</p> Signup and view all the answers

    What can be an effective way to simplify customs legislation?

    <p>Establish a compliance framework</p> Signup and view all the answers

    Which of the following is NOT a part of the system of formalities in operational customs clearance?

    <p>Ensuring goods are thoroughly packed</p> Signup and view all the answers

    What is one of the primary benefits of clustering in export packaging?

    <p>Enhances storage ease</p> Signup and view all the answers

    What should be analyzed in the implementation of material customs legislation?

    <p>Tariffs associated with products</p> Signup and view all the answers

    What is one of the benefits of joint selling for the companies involved?

    <p>Standardisation leads to reorganisation of product ranges</p> Signup and view all the answers

    What characteristic best describes joint ventures?

    <p>Participating companies retain their independence while collaborating</p> Signup and view all the answers

    Which is a drawback of piggy-backing in joint selling?

    <p>The exporter has no say in how the foreign market is handled</p> Signup and view all the answers

    Which is a reason to consider a joint venture?

    <p>It enables faster entry into new markets</p> Signup and view all the answers

    What is an example of an export function in an export combination?

    <p>Creating export opportunities for members</p> Signup and view all the answers

    What is a common interest in export areas that can benefit companies in an export combination?

    <p>Joining complementary product ranges to meet foreign market needs</p> Signup and view all the answers

    What is one of the reasons for companies to enter a joint venture?

    <p>To access global investment and research and development</p> Signup and view all the answers

    What characterizes a real merger?

    <p>Companies lose their independence partly or wholly.</p> Signup and view all the answers

    What is a primary advantage of exporting for companies that participate in an export combination?

    <p>The central body handles execution of the export marketing strategy</p> Signup and view all the answers

    Which of the following represents high risk in setting up a distribution channel?

    <p>Establishing an own sales office abroad.</p> Signup and view all the answers

    What is a primary benefit of mergers and acquisitions?

    <p>Immediate profit realization through economies of scale.</p> Signup and view all the answers

    Which risk category involves low costs and existing distribution networks?

    <p>Low risk.</p> Signup and view all the answers

    What approach is characterized by intensive change of experience between companies?

    <p>Realization of economies of skills.</p> Signup and view all the answers

    What is an unreal merger often described as?

    <p>Take-over or acquisition.</p> Signup and view all the answers

    Which channel might be banned by legislation in certain countries?

    <p>Certain wholesalers.</p> Signup and view all the answers

    What does the medium risk category depend on?

    <p>Influence of foreign intermediary links.</p> Signup and view all the answers

    Study Notes

    Inventory and Supply Chains

    • Inventory is the amount of goods available.
    • Inventory formats include raw materials, work-in-progress (WIP), and finished goods.
    • Cycle stock is necessary for regular demand.
    • Safety stock is a buffer against errors and supplier unreliability.
    • In-transit stock is in the process of shipping.
    • Seasonal stock is built up during peak times.
    • Promotional stock is used in marketing campaigns.
    • Speculative stock protects against price increases.
    • Average cycle stockholding is the average amount of cycle stock held over a period.
    • Average cycle stock investment is the cost of the average cycle stock.
    • Safety stock is calculated by adding safety stock supply and safety stock demand together.
    • Safety stock supply is found by multiplying the average demand by the supplier uncertainty (SU).
    • Safety stock demand is the standard deviation of demand multiplied by the service level factor multiplied by the square root of the lead time plus the SU.
    • Demand and supply planning includes level and frequency of demand, patterns of demand, and forecasting.

    Forecasting Methods

    • Qualitative forecasting uses intuition.
    • Quantitative forecasting is historical or casual.
    • Time series methods use statistical forecasting based on historical patterns.
    • Forecast accuracy (FA) uses mean absolute percentage error (MAPE).
    • Error = (Actual - Forecast) / Actual.

    Supply Planning

    • Order cycle management decides when to order.
    • Calculating economic order quantity (EOQ) decides how much to order.
    • Continuous review (fixed order quantity) and periodic review (fixed order cycle) are order management approaches.
    • The EOQ formula is EOQ = √(2CR/F).

    S&OP Implementation

    • Stakeholder commitment is crucial for a successful implementation.
    • A single set of numbers for sales, marketing, etc. is best.
    • Accountability and decision-making structures should be well defined.
    • Business objective alignment improves efficiency.
    • Time horizon alignment helps managers think ahead.
    • Understanding and recognizing S&OP imperfections allows for adjustments and improvement.

    Customer Service Improvements

    • Improved forecasts and reconciliation of demand and supply lead to improved customer service.
    • Reasons for S&OP failures can be attributed to issues like people, processes between departments, strategy, or performance measurement.

    Supply Chain Finance

    • Companies generate cash flow and return to investors through supply chain management.

    • Gearing is the proportion of external and internal funds in capital investment.

    • Return on assets (ROA) evaluates the profitability and efficiency of asset usage.

    • ROCE (return on capital employed) is how efficiently a company utilises its available capital.

    • Profit and Loss accounts (income statements) detail sales and costs for a financial year.

    • Hurdle rates, cost of debt, and cost of equity capital combine to calculate WACC.

    Outsourcing

    • Outsourcing involves moving company aspects or functions to an external supplier.
    • Globalization, increasing complexity, and emerging markets are key drivers for outsourcing.
    • Operational excellence, product leadership, and customer intimacy are types of competitive strategies.
    • Common reasons for outsourcing are increased operating flexibility and reduced fixed assets.
    • Potential concerns for outsourcing include loss of direct customer interface, time investment for the external supplier to understand the business, and potential diminished customer-focus for the external supplier after long-term commitments.
    • Steps in outsourcing include reviewing scope of operations and requirements, identifying potential providers, developing and issuing requests for information (RFI) and quotations (RFQ), assessing tenders, selecting contracts and assessing risks, implementing contracts and managing ongoing relationships.

    Choosing an Entry Strategy

    • Choosing an entry strategy involves methods such as direct, indirect or cooperative exports.
    • Methods may be dictated by naïveté, pragmatism or a strategic approach. and are potentially influenced by home country practices and other external market factors.

    Logistics and Customs Policy

    • Logistics is the process of organizing, planning, managing, and processing the flow of goods.
    • Logistics activities can include, but are not limited to, purchasing (logisitcs), production logistics and physical distribution.
    • Customs legislations and requirements have to be considered for operations abroad.
    • International trade (international shipments abroad) sometimes involve multiple forms of transport to arrive at the final destination.

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    Description

    This quiz explores essential concepts in inventory and supply chain management, including types of inventory, cycle stock, safety stock, and their calculations. It also addresses various stock formats such as in-transit and seasonal stock, highlighting their importance in optimizing supply chains. Test your knowledge and understanding of these fundamental principles.

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