Inventory Management & Control Flashcards

A warehouse experiences a stockout before the replenishment order arrives. This situation is best described as:

Answer: A backorder condition

A backorder occurs when customer demand exceeds available inventory, requiring the order to be fulfilled once stock is replenished.

Which inventory performance metric measures the percentage of customer orders shipped completely on time from available stock?

Answer: Order fill rate

Order fill rate is the percentage of orders fulfilled completely from on-hand inventory without backorders or substitutions.

What is the main disadvantage of holding excessive safety stock?

Answer: Higher carrying costs and tied-up capital

Excess safety stock increases carrying costs (storage, insurance, capital opportunity cost) without proportional service-level benefit.

Which replenishment strategy sets a fixed order quantity triggered when inventory falls to a predetermined level?

Answer: Fixed-quantity (Q) system

The fixed-quantity (Q) system orders the same amount (often EOQ) whenever inventory drops to the reorder point.

In cross-docking operations, inventory control is critical because products typically:

Answer: Move from inbound to outbound with little or no storage time

Cross-docking transfers goods directly from receiving docks to outbound shipping with minimal or zero warehouse storage time.

Which document serves as the primary record authorizing the movement of inventory out of a warehouse to a customer?

Answer: Pick list / sales order

A pick list (derived from a sales order) authorizes warehouse staff to select and release specific inventory for customer shipment.

When performing a physical inventory count, a 'blind count' method means that counters:

Answer: Do not receive expected quantity information before counting

Blind counting prevents bias by withholding expected quantities, forcing counters to record what they actually observe.