Manufacturing and Production Supply Chain Management

Question 1

What does EOQ stand for in inventory management?

Accepted Answer

Economic Order Quantity

Answer

Economic Order Quantity is the optimal order size that minimizes total inventory holding and ordering costs.

Question 2

Safety stock in supply chain management is maintained to:

Accepted Answer

Buffer against demand variability and supply uncertainty

Answer

Safety stock is extra inventory kept to prevent stockouts caused by unpredictable demand spikes or supply delays.

Question 3

The 'bullwhip effect' in supply chains refers to:

Accepted Answer

Amplification of demand variability as orders move upstream through the supply chain

Answer

The bullwhip effect describes how small fluctuations in end-customer demand become progressively larger variability upstream.

Question 4

Just-in-Time (JIT) inventory management aims to:

Accepted Answer

Receive materials only as they are needed in the production process

Answer

JIT reduces inventory waste by synchronizing material deliveries with production needs, minimizing carrying costs.

Question 5

What is a vendor-managed inventory (VMI) arrangement?

Accepted Answer

The supplier monitors and replenishes the customer's inventory automatically

Answer

In VMI, the supplier takes responsibility for maintaining agreed inventory levels at the customer's location.

Manufacturing and Production Practice Test