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Inventory Control & Supply Chain Management Flashcards

7 cards from real MRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Inventory Control & Supply Chain Management flashcards as text

  1. Which inventory costing method assigns the most recent purchase costs to cost of goods sold during periods of rising prices?

    Answer: LIFO

    LIFO (Last-In, First-Out) assigns the most recently purchased (highest cost) inventory to COGS first, resulting in higher COGS and lower reported profit during inflation.

  2. A supply chain manager wants to reduce the total number of suppliers from 50 to 15. This strategy is known as:

    Answer: Supplier consolidation

    Supplier consolidation reduces the supplier base to gain leverage, simplify relationships, and potentially secure volume discounts.

  3. What does 'fill rate' measure in inventory management?

    Answer: The percentage of customer demand met from available stock

    Fill rate measures the proportion of customer orders or demand that can be satisfied immediately from on-hand inventory without backorders or lost sales.

  4. In supply chain risk management, what is a 'single-source' risk?

    Answer: Purchasing all of a critical component from one supplier

    Single-source risk occurs when a company depends on a single supplier for a critical component, making it vulnerable if that supplier experiences disruptions.

  5. Which metric measures how efficiently a company uses its inventory by comparing cost of goods sold to average inventory?

    Answer: Inventory turnover ratio

    Inventory turnover ratio = COGS ÷ Average Inventory, indicating how many times inventory is sold and replaced over a period.

  6. What is the primary goal of a 'postponement' strategy in supply chain management?

    Answer: Defer product customization until actual demand is known

    Postponement delays final product configuration or customization until customer orders are received, reducing the risk of holding wrong finished goods inventory.

  7. Which of the following best describes 'landed cost' in supply chain management?

    Answer: Total cost including purchase price, freight, duties, and handling charges

    Landed cost encompasses all costs to get a product to its final destination, including purchase price, freight, insurance, customs duties, and handling fees.