Operations Management Quiz

Inventory Management

• A DRP system is usually coupled with a JIT system to manage the flow and timing of inbound materials and outbound finished goods.
• Inventory risk cost includes insurance, damage, theft, and obsolescence.
• The EOQ model assumes there is no inventory in transit, the planning horizon is infinite, all inventory parts are independent of each other, and the item purchase price is not dependent on the amount ordered.

Inventory Models

• Pull inventory models are most likely to be Kanban.
• The relationship between customer service level and inventory investment is inversely proportional.

Inventory and GDP

• Inventory and GDP grew by different amounts between 1994 and 2010.

Batching Economies

• Batching economies or cycle stocks usually arise from procurement, transportation, and production sources.

WIP Inventories

• WIP inventories are associated with manufacturing and are not included on the balance sheet.

Seasonal Stocks

• Seasonal stocks are not influenced by EOQ, but by weather, transportation, holidays, and other seasonal factors.

Inventory and Departments

• The marketing department has an impact on inventory.

Capital Cost

• Capital cost focuses on the cost of capital tied up in inventory and the resulting lost opportunity from investing that capital elsewhere.

Visibility

• Visibility of demand, customer orders, delivery status, inventory stock levels, and production schedules provides managers with the knowledge needed to make effective situational assessments and develop appropriate responses.

Logistics

• The seven Rs of logistics include: getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, and at the Right cost.

Supply Chain Information System (SCIS)

• SCIS is defined as an information system that automates the flow of information between a firm and its suppliers.

Supply Chain Software

• Supply chain software includes technologies that address virtually every function and task that occurs in the supply chain, help organizations plan, execute, and control supply chain activities in real-time, and maintain visibility of inventory.

ERP Systems

• ERP systems have information elements needed by SCIS applications.

Lean Production

• Lean production relies on the Toyota production system (TPS), pull-based systems, and just-in-time systems.

Capacity

• Capacity determines the maximum amount of work that an organization is capable of completing in a given period of time.

Inventory Management Objectives

• Inventory and production must be managed together.
• Maximum customer service and low inventory cost are conflicting company objectives.

Costs of Carrying Inventory

• Costs of carrying inventory include capital cost, storage cost, and obsolescence.

Inventory Management Decisions

• Relevant costs include storage cost, production control cost, and purchasing cost.

Packaging

• Packaging is critical to logistics.

Adaptive Manufacturing

• Adaptive manufacturing is a newly launched twenty-first-century addition to production strategy that leverages lean manufacturing strategies, Six Sigma best practices, and real-time actionable intelligence from the factory floor.

Production Strategies

• Assemble-to-order production involves combining common components and a limited number of options or accessories made available to the customer.

Process Flexibility

• Processes that can produce a range of products are said to have economies of scope.

Supply Chain Challenges

• Established manufacturers face challenges such as expanding product life cycles, competition, customer demand, and pressure for efficiency.

Transportation and Logistics

• A push-based strategy works well for supply chains that focus on the anticipation of demand or without knowledge of customer orders.
• Transportation efficiency promotes competition in the supply chain.
• The distances in today's global supply chains produce higher costs, longer transit times, and more disruptions.