Inventory Management & Supply Chain Flashcards

Which inventory costing method assumes the most recently purchased items are sold first?

Answer: LIFO

LIFO (Last-In, First-Out) assumes the newest inventory is sold first, which can lower taxable income during periods of rising prices.

A food manufacturer's supplier fails to deliver a key ingredient on time, forcing a production halt. This is best described as:

Answer: Supply chain disruption

A supply chain disruption occurs when upstream failures prevent timely delivery of inputs needed for production.

Which metric measures the number of times inventory is sold and replaced over a given period?

Answer: Inventory turnover ratio

Inventory turnover ratio = Cost of Goods Sold ÷ Average Inventory, indicating how efficiently stock is moving.

In a food service context, 'perpetual inventory' refers to:

Answer: Continuously updating inventory records with each transaction

Perpetual inventory systems update records in real time with every purchase, use, or waste event.

Cross-docking in a food supply chain primarily serves to:

Answer: Eliminate or minimize warehousing by transferring product directly to outbound transport

Cross-docking transfers incoming shipments directly to outbound vehicles with little or no storage time, reducing handling and storage costs.

Which of the following best defines 'lead time' in procurement?

Answer: Time between placing an order and receiving it

Lead time is the elapsed time from when a purchase order is placed until the goods arrive and are ready for use.

A food company uses a vendor-managed inventory (VMI) system. This means:

Answer: The supplier monitors inventory levels and triggers replenishment automatically

In VMI, the supplier assumes responsibility for monitoring inventory and initiating replenishment orders based on agreed-upon parameters.