Supply Chain and Inventory Management Flashcards
7 cards from real ERP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Supply Chain and Inventory Management flashcards as text
A manufacturer calculates its Economic Order Quantity (EOQ). Which cost components are balanced in the EOQ formula?
Answer: Ordering cost and holding cost
EOQ minimizes total inventory cost by finding the order quantity at which ordering cost and holding (carrying) cost are equal.
In an ERP system, which process converts planned orders into actual purchase orders or production orders?
Answer: Firming planned orders
Firming a planned order converts an MRP-generated planned order into an actual purchase order or work order that can be executed.
What does Days Inventory Outstanding (DIO) measure?
Answer: Average number of days a company holds inventory before selling it
DIO (also called Days in Inventory) measures how many days on average a company holds inventory before it is sold or consumed.
Which supply chain strategy is characterized by manufacturing products to a forecast before customer orders are received?
Answer: Make-to-Stock
Make-to-Stock (MTS) produces goods against a demand forecast so finished goods are available immediately when customer orders arrive.
A company experiences frequent stockouts despite having high inventory levels. Which root cause is MOST likely?
Answer: Poor forecast accuracy driving misaligned inventory mix
High overall inventory with frequent stockouts typically indicates a mismatch in inventory mix caused by inaccurate demand forecasting for specific SKUs.
In ERP warehouse management, what is the purpose of a cross-docking operation?
Answer: Transfer inbound goods directly to outbound shipping with minimal storage
Cross-docking moves products from inbound receiving directly to outbound shipping docks with little or no intermediate storage, reducing handling time and costs.
Which ERP feature enables a company to promise customers a specific delivery date based on real-time inventory and production data?
Answer: Available-to-Promise (ATP)
Available-to-Promise (ATP) checks real-time availability of inventory and planned production to give customers an accurate and reliable delivery commitment.