Bachelor of Science in Engineering Management: Operations and Supply Chain Flashcards

A manufacturer uses the Economic Order Quantity (EOQ) model. If annual demand doubles while holding cost remains the same, the optimal order quantity changes by a factor of:

Answer: √2 (increases by about 41%)

EOQ = √(2DS/H), so doubling D multiplies EOQ by √2 ≈ 1.414.

Which supply chain risk mitigation strategy involves holding extra inventory beyond average demand to buffer against uncertainty?

Answer: Safety stock

Safety stock is buffer inventory held to protect against demand variability and supply lead-time uncertainty.

In a pull-based supply chain system, production is triggered by:

Answer: Actual customer demand or downstream consumption

Pull systems (e.g., Kanban) initiate production only when real demand signals arrive from downstream stages.

The bullwhip effect in supply chains describes:

Answer: The amplification of demand variability as orders move upstream

Small fluctuations in end-customer demand get progressively amplified at each upstream supply chain tier, resembling a bullwhip's motion.

A company's Days Sales of Inventory (DSI) is 45 days. This metric primarily indicates:

Answer: How many days of inventory the company carries on average

DSI = (Inventory / COGS) × 365, measuring how many days on average inventory is held before being sold.

Which queuing model assumption is violated when a hospital emergency room prioritizes critical patients over less urgent ones?

Answer: First-In, First-Out (FIFO) discipline

FIFO assumes customers are served in arrival order; priority queuing overrides this by serving higher-priority arrivals first.

Postponement strategy in supply chain management involves:

Answer: Delaying product differentiation until closer to the point of customer demand

Postponement delays customization so that generic components are held until actual demand patterns become clearer, reducing variety-driven inventory risk.