Inventory Management & Supply Chain Flashcards

What does 'JIT' stand for in manufacturing inventory management?

Answer: Just-In-Time

JIT (Just-In-Time) is an inventory strategy that minimizes waste by receiving goods only as they are needed in production.

Which inventory review system places replenishment orders when stock falls to a predetermined reorder point?

Answer: Continuous review system

A continuous review (perpetual) system constantly monitors stock levels and triggers replenishment orders when inventory reaches the reorder point.

In supply chain management, 'lead time' refers to:

Answer: Time between placing an order and receiving it

Lead time is the elapsed time from when an order is placed until the ordered items are received and available for use.

Which inventory valuation method assumes the first items purchased are the first items sold or used?

Answer: FIFO

FIFO (First-In, First-Out) assumes that the oldest inventory is consumed first, which matches the natural flow of most perishable goods.

What is 'safety stock' primarily maintained to address?

Answer: Unexpected demand increases or supply delays

Safety stock is extra inventory held as a buffer to prevent stockouts caused by unexpected spikes in demand or delays in replenishment.

ABC analysis in inventory management categorizes items primarily by:

Answer: Value and usage frequency to prioritize management effort

ABC analysis divides inventory into three tiers—A (high value/impact), B (moderate), C (low)—to focus control efforts where they matter most.

Economic Order Quantity (EOQ) is the order quantity that:

Answer: Minimizes total inventory ordering and holding costs

EOQ calculates the optimal order size that balances ordering costs against holding costs to minimize total inventory expense.