Inventory Management Strategies

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What is the most effective way to reduce stockouts of critical, inexpensive items in a manufacturing process?

Standardize the items

Initiate a vendor-managed inventory (VMI) program for the items (correct)

Increase minimum inventory levels for the items

Assign personnel to manage the items

A company has $3,000 in inventory and an asset turnover ratio of 1.8. What is the total sales volume for the company?

$5,400

$25,000

$15,000

$9,000 (correct)

What is the most appropriate measure of product and service quality?

Internal inspection

Warranty claims (correct)

Product performance

Customer perception

A company sells 60 units of product in a year, with an average quantity on hand of 10 units. How many days of product inventory does the company have?

60 Signup and view all the answers

What is the primary benefit of implementing a cross-docking system?

Reduced inventory levels Signup and view all the answers

Which metric is most closely related to inventory management?

Inventory turnover Signup and view all the answers

What type of inventory strategy gives the customer who provides point-of-sale data the sole decision-making authority regarding order quantities?

Vendor-managed replenishment Signup and view all the answers

What is a benefit of using bar code labels for product identification in the supply chain?

They facilitate the capture of information about the location of items Signup and view all the answers

What do inventory parameters established using analytic inventory techniques typically balance?

Customer service and inventory costs Signup and view all the answers

What type of metrics would a firm use if it wanted to use return on investment (ROI), return on assets (ROA), and economic value added (EVA)?

Stakeholder-focused metrics Signup and view all the answers

What is a key benefit of using vendor-managed replenishment?

It improves efficiency and reduces costs Signup and view all the answers

What is the primary goal of using analytic inventory techniques?

To optimize inventory management Signup and view all the answers

What is the primary reason for a manufacturer to hold inventory of key components?

To maintain a level production schedule Signup and view all the answers

What is the term for the inventory a distributor maintains for slow-moving items at a central distribution center?

Safety stock Signup and view all the answers

What is the benefit of increasing inventory turns from four to six for a company with an annual cost of goods sold of $350 million and an inventory carrying cost of 18%?

Cost savings of $5,250,000 Signup and view all the answers

What is continuous improvement best described as?

A never-ending effort to expose and eliminate root causes of problems Signup and view all the answers

What is an important factor to consider in the make-or-buy decision?

Available capacity Signup and view all the answers

When would using an independent service provider for logistics be most appropriate?

When there is a need for specialized logistics expertise Signup and view all the answers