Management of Supply Chain and Inventory

These flashcards cover key concepts, definitions, and implications related to supply chain management and inventory as discussed in the lecture.

What is a key factor in managing a product-based supply chain?

How much inventory to keep on hand.

Why is careful inventory management essential for businesses?

Inventory is usually one of the company’s largest assets.

What are the consequences of inadequate inventory management?

Dissatisfied customers, lost sales and revenue, and higher costs.

How can inventory be defined?

Inventory is the quantities of goods and materials held in stock.

What are the four main categories of inventory?

Raw Materials, Work-in-Process (WIP), Finished Goods, Maintenance, Repair and Operating (MRO) supplies.

What is the characteristic of Raw Materials in inventory management?

Purchased items or extracted materials converted into components and products.

What does WIP inventory represent?

Goods in various stages of completion throughout the plant.

What distinguishes Finished Goods from other inventory categories?

All manufacturing operations have been completed, and they are available for sale.

What are MRO supplies?

Items used to support operations and maintenance, but do not end up as part of the finished product.

Why do service industries not maintain inventory of services?

Services are produced and consumed immediately upon demand.

What is the purpose of safety stock in inventory management?

To protect against fluctuations in demand or supply.

What is the role of inventory management?

To help a company be more profitable by balancing inventory levels.

What factors influence the right amount of inventory to hold?

Supply chain strategy, type of product, customer expectations, etc.

What is the Reorder Point (ROP)?

The inventory level at which a new order must be placed to avoid a stockout.

What is Economic Order Quantity (EOQ)?

A quantitative model based on the trade-off between annual inventory order costs and carrying costs.

What is the function of Hidden Costs in inventory?

Having too much or too little inventory can mask underlying problems.

What does the ABC Inventory System classify?

Inventory based on the degree of importance.

What is a Bin System in inventory management?

An inventory system that uses one or two bins to manage low-value items.

How does RFID technology enhance inventory tracking?

It does not require direct line of sight to read a tag, and tags can be updated.

What are common metrics used to measure inventory performance?

Units, dollars, weeks of supply, and inventory turns.

What is the significance of Obsolete Inventory?

It will never be sold at full value and may incur disposal costs.