Week 5 quiz

• What is the definition of inventory management?

• • The systematic process of managing the procurement, storage, tracking, transfer and shipment of all types of inventories

• • The strategic process of planning, organizing, directing, and controlling the inventory activities and resources

• • The operational process of ordering, receiving, storing, and issuing the inventory items as required by a business

• • The analytical process of forecasting, replenishing, optimizing, and evaluating the inventory performance and cost

• What are the main objectives of inventory management?

• • To ensure optimal inventory levels, improve cash flow, reduce storage requirements, minimize waste and shrinkage, reduce product shelf-time, support demand planning, and analyse sales patterns

• • To meet customer demand, invest as little as possible in stock, increase profitability, and comply with regulatory requirements

• • To balance the demand and supply, reduce the inventory costs, improve the service level, and enhance the customer satisfaction

• • All of the above

• What are the main types and functions of inventory?

• • Raw materials, work-in-progress, finished goods, and spare parts

• • Cycle stock, safety stock, anticipation stock, and pipeline stock

• • Buffering, smoothing, decoupling, and hedging

• • All of the above

• What are the main factors that affect the level of inventory?

• • Customer demand, lead time, service level, holding cost, ordering cost, and shortage cost

• • Demand variability, supply uncertainty, product life cycle, and market competition

• • Inventory turnover ratio, fill rate, stockout rate, and inventory accuracy

• • All of the above

• What are the main advantages of ABC analysis?

• • A) It helps to allocate the inventory resources and efforts according to the priority and profitability of the items

• • B) It helps to improve the inventory control and accuracy

• • C) It helps to reduce the inventory level, waste, and emissions

• • D) A and B

• What are the main disadvantages of ABC analysis?

• • A) It may ignore the other factors that affect the inventory management, such as demand variability, lead time, and product life cycle

• • B) It may require frequent updates and adjustments to reflect the changes in the inventory value and importance

• • C) It may result in excess inventory or frequent orders if the demand or lead time fluctuates

• • D) A and B

• What are the main advantages of just-in-time (JIT) inventory management?

• • A) It eliminates the need for holding excess inventory and reduces the inventory costs, such as storage, handling, insurance, and obsolescence

• • B) It improves the cash flow, profitability, and customer satisfaction

• • C) It enhances the coordination and collaboration with the suppliers and customers

• • D) All of the above

• What are the main disadvantages of JIT inventory management?

• • A) It requires a high level of trust and communication between the buyer and the supplier

• • B) It requires a high degree of flexibility and responsiveness to the demand fluctuations

• • C) It increases the risk of stockouts and disruptions

• • D) All of the above

• What are the main advantages of vendor-managed inventory (VMI)?

• • A) It reduces the inventory costs, improves the service level, enhances the supply chain visibility, and strengthens the relationship for both the buyer and the supplier

• • B) It transfers the responsibility of managing the inventory from the buyer to the supplier

• • C) It allows the supplier to monitor the inventory level and demand of the buyer, and to replenish the inventory when needed

• • D) All of the above

• What are the main disadvantages of VMI?

• • A) It requires a high level of trust and communication between the buyer and the supplier

• • B) It may result in a loss of control or power for the buyer or the supplier

• • C) It may create conflicts or disputes over the inventory ownership and benefits

• • D) All of the above