Inventory Management Module 3 Quiz

Study Notes

Inventory ensures a smooth supply chain process and minimizes disruptions.
Defined as materials or items owned by a business for production or sale purposes.
Different forms of inventory include raw materials, work in progress, finished goods, and goods in transit.

Acts as safety stock to manage unexpected demand surges or supply shortages.
Understocking occurs when demand exceeds available inventory, leading to lost sales and reduced margins.
Overstocking happens when inventory exceeds demand, resulting in liquidation, obsolescence, and increased holding costs.

Service level refers to the probability of satisfying inventory demands within a specified time frame.
Key metrics include Item Fill Rate (IFR) and Cycle Service Level (CSL).
A higher amount of inventory typically correlates with a higher service level.
Insufficient inventory results in a higher likelihood of stockouts.

Sustainability in inventory focuses on reducing environmental impacts without compromising profitability.
Effective practices include minimizing carbon emissions through various strategies:
- Implementing green energy solutions in warehouses to reduce energy consumption.
- Choosing transportation methods with lower carbon footprints.
- Reducing overall inventory levels to lower emissions from storage and transportation.
- Designing products for reuse to decrease the need for disposal, which can further minimize environmental impact.