Inventory Management & Supply Chain Flashcards

A manufacturer experiences a sudden 40% spike in customer orders. Under which inventory replenishment approach would production most likely struggle to respond quickly?

Answer: Just-in-Time (JIT) with minimal buffer stock

JIT systems minimize buffer inventory, so a sudden demand surge cannot be absorbed from stock and requires rapid supply chain response that may not be achievable.

In supply chain management, what is 'demand sensing' used for?

Answer: Using near-real-time data to improve short-term demand forecasts

Demand sensing uses point-of-sale data, shipment data, and analytics to detect actual demand patterns in near real-time, improving short-term forecast accuracy.

A production technician is performing a cycle count and finds 47 units physically present but the system shows 52 units. What is the correct first action?

Answer: Recount the physical inventory to verify the discrepancy

Before making any system adjustment, a recount should verify the physical count is accurate, as counting errors are a common source of apparent discrepancies.

Which of the following best describes 'postponement' as a supply chain strategy?

Answer: Deferring final product customization until closer to customer demand

Postponement delays product differentiation or customization to the latest possible point in the supply chain, reducing risk of holding wrong finished goods inventory.

A company's supplier scorecard shows an on-time delivery rate of 72%. What is the most direct negative impact on the buyer's operations?

Answer: Higher required safety stock to buffer against late deliveries

Poor on-time delivery forces the buyer to hold additional safety stock to maintain production continuity despite unreliable supply, increasing inventory carrying costs.

What is the key operational difference between a 'push' and 'pull' inventory replenishment system?

Answer: Push replenishes based on forecasts; pull replenishes based on actual consumption

Push systems use demand forecasts to proactively send inventory downstream, while pull systems replenish only when actual consumption signals a need, as in kanban.

A production facility receives components from three suppliers, all with different lead times. Which inventory planning approach best handles this multi-supplier variability?

Answer: Maintain separate item master lead times per supplier and use supplier-specific planning

Maintaining supplier-specific lead times in the item master ensures MRP calculates accurate order release dates for each source, preventing both stockouts and excess inventory.