Inventory Management & Supply Chain Flashcards

In a 'pull' production system, manufacturing is triggered by:

Answer: Actual customer demand

Pull systems initiate production only when actual customer demand signals a need, reducing overproduction and excess inventory.

In a Vendor-Managed Inventory (VMI) arrangement, who is responsible for monitoring and replenishing inventory?

Answer: The supplier/vendor

VMI delegates the responsibility of monitoring and replenishing a customer's inventory to the supplier, based on agreed service levels.

Cycle counting is best described as:

Answer: Auditing a small subset of inventory items on a rotating basis

Cycle counting is a continuous audit method that counts portions of inventory on a rotating schedule, providing more timely accuracy than annual physical inventories.

The 'bullwhip effect' in supply chains describes:

Answer: Amplified order variability as demand signals move upstream through the supply chain

The bullwhip effect occurs when small changes in end-customer demand cause increasingly large swings in orders further up the supply chain.

Cross-docking in logistics involves:

Answer: Transferring goods from inbound to outbound vehicles with minimal or no storage

Cross-docking moves products directly from receiving docks to shipping docks, bypassing warehouse storage to speed delivery and reduce handling costs.

Kitting in manufacturing refers to:

Answer: Pre-assembling sets of components needed for a specific job into one package

Kitting groups all components required for a manufacturing order into a single kit, streamlining assembly and reducing picking errors on the floor.

Which term describes the specific inventory level at which a replenishment order must be placed?

Answer: Reorder point

The reorder point is the specific inventory level that triggers a new purchase order to ensure stock is replenished before a stockout occurs.