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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. A company has average inventory of $500,000 and COGS of $3,000,000. What are the days of supply (DOS)?

    Answer: 60 days

    DOS = (Average Inventory / COGS) × 365 = ($500,000 / $3,000,000) × 365 ≈ 60.8 days.

  2. In MRP systems, what is the 'planning horizon'?

    Answer: The time period covered by the production and procurement plan

    The planning horizon is the total future time period that the MRP plan covers, typically set to encompass the longest cumulative lead time plus buffer.

  3. Which supply chain model uses a 'pull' system where production is triggered only by actual customer demand?

    Answer: Make-to-order (MTO)

    Make-to-order uses a pull system where manufacturing begins only after a confirmed customer order, avoiding finished goods inventory buildup.

  4. What is 'collaborative planning, forecasting, and replenishment' (CPFR) designed to achieve?

    Answer: Improve supply chain performance through buyer-supplier data sharing

    CPFR enables trading partners to jointly develop forecasts and replenishment plans by sharing sales data, promotional plans, and inventory information.

  5. A product has a 30-day average lead time with a standard deviation of 5 days, and average daily demand is 100 units. At a 95% service level (z=1.645), what is the approximate safety stock?

    Answer: 822 units

    Safety stock = z × σ_LT × d = 1.645 × 5 × 100 = 822.5 ≈ 822 units, accounting only for lead time variability.

  6. Which concept describes the total time from raw material procurement to delivery of finished goods to the end customer?

    Answer: Supply chain throughput time

    Supply chain throughput time (or total pipeline lead time) spans the entire chain from raw material sourcing through manufacturing to final customer delivery.

  7. In inventory management, what distinguishes 'independent demand' from 'dependent demand'?

    Answer: Independent demand is forecasted; dependent demand is calculated from a bill of materials

    Independent demand (finished goods) must be forecasted from external sources, while dependent demand (components/subassemblies) is derived mathematically from the parent item's production plan via BOM explosion.