Inventory, Logistics & Supply Chain Management Flashcards
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Read the first 7 Inventory, Logistics & Supply Chain Management flashcards as text
A purchasing practitioner calculates a reorder point of 500 units. This figure represents:
Answer: The inventory level at which a replenishment order should be triggered
The reorder point is the inventory level that triggers a new purchase order, calculated as average demand during lead time plus safety stock.
Which logistics concept involves shipping goods directly from the manufacturer to the end customer, bypassing the retailer's warehouse entirely?
Answer: Drop shipping
Drop shipping is a fulfillment model where the seller takes orders but the manufacturer or wholesaler ships directly to the end customer, eliminating the seller's need to hold inventory.
What does a high inventory turnover ratio generally indicate about a company's inventory management?
Answer: Inventory is selling quickly and being replenished efficiently
A high inventory turnover ratio indicates goods are being sold and replaced rapidly, suggesting efficient inventory management and strong demand.
In supply chain management, 'reverse logistics' refers to:
Answer: The process of managing returns, recalls, recycling, and disposal of products
Reverse logistics encompasses the processes for moving goods from the customer back through the supply chain for return, repair, recycling, or disposal.
A purchasing team is evaluating whether to use a single-source or multi-source strategy for a critical component. What is the primary advantage of multi-sourcing?
Answer: Reduced supply risk through supplier redundancy and competitive leverage
Multi-sourcing reduces supply disruption risk by providing alternative sources and creates competitive pressure that can improve pricing and service levels.
Which of the following is a key benefit of implementing a Warehouse Management System (WMS)?
Answer: Optimizes warehouse space utilization, picking accuracy, and real-time inventory visibility
A WMS improves warehouse efficiency by directing storage locations, optimizing pick paths, tracking inventory in real time, and reducing picking errors.
When a purchasing practitioner applies ABC analysis to inventory, 'A' items are characterized by:
Answer: High annual dollar usage representing a small percentage of SKU count
ABC analysis classifies 'A' items as the small percentage of SKUs (typically ~20%) that account for the largest share (typically ~70-80%) of total inventory value or spend.