Supply Chain Management & Logistics Flashcards

What is the 'bullwhip effect' in supply chain management?

Answer: Demand amplification as orders move upstream from retailer to manufacturer

The bullwhip effect describes how small variations in downstream consumer demand get increasingly amplified as orders are placed upstream through the supply chain.

What does 'vendor-managed inventory' (VMI) mean?

Answer: The supplier monitors and replenishes the buyer's inventory based on agreed levels

In VMI, the supplier takes responsibility for monitoring the customer's inventory and triggering replenishments when stock falls below agreed-upon thresholds.

Which inventory classification method categorizes items into A, B, and C groups based on annual dollar usage?

Answer: ABC analysis

ABC analysis ranks inventory items by annual consumption value: A items (top ~20%) represent ~80% of value and receive the tightest control.

What is the primary purpose of a distribution requirements planning (DRP) system?

Answer: To coordinate replenishment of inventory across distribution network locations

DRP extends MRP logic into the distribution network, calculating time-phased replenishment orders for warehouses and distribution centers.

In supply chain terms, what is 'lead time'?

Answer: The total elapsed time from order placement to receipt of goods

Lead time encompasses all elapsed time from when an order is placed until the ordered goods are received and available for use.

Which logistics strategy positions inventory closer to customers to reduce delivery time?

Answer: Forward deployment (forward stocking locations)

Forward deployment places inventory in regional or local stocking locations near the customer base to shorten replenishment lead times.