MRP Inventory Control & Supply Chain Management 2

Question 1

A company's annual demand is 10,000 units, ordering cost is $50, and holding cost is $2 per unit per year. What is the Economic Order Quantity (EOQ)?

Accepted Answer

707 units

Answer

EOQ = √(2DS/H) = √(2×10,000×50/2) = √500,000 ≈ 707 units.

Question 2

Which inventory classification method assigns items to categories A, B, and C based on their annual dollar value?

Accepted Answer

ABC analysis

Answer

ABC analysis categorizes inventory by annual dollar value, with A items representing the highest value (typically 70-80% of total value but only 10-20% of items).

Question 3

In supply chain management, what does the term 'bullwhip effect' describe?

Accepted Answer

Demand variability amplification upstream in the supply chain

Answer

The bullwhip effect describes how small demand fluctuations at the retail level become increasingly amplified as orders move upstream through the supply chain.

Question 4

A warehouse uses cycle counting. If it has 5,000 SKUs and counts 20 items per day, approximately how many days does one full cycle take?

Accepted Answer

250 days

Answer

5,000 SKUs ÷ 20 items/day = 250 days for one complete cycle count.

Question 5

Which supply chain strategy positions inventory closer to end customers to reduce lead times, often used in e-commerce?

Accepted Answer

Forward deployment

Answer

Forward deployment places inventory in regional fulfillment centers near customers to reduce last-mile delivery times.

(MRP) MRP Certified Agents Practice Test

(MRP) MRP Certified Agents Practice Test

MRP Inventory Control & Supply Chain Management 2