Inventory Control & Demand Planning Flashcards
7 cards from real CPL 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 & Demand Planning flashcards as text
What does the 'days of supply' metric indicate?
Answer: How long current on-hand inventory will last at the current demand rate
Days of supply (also called days on hand) is calculated as current inventory divided by average daily demand, showing inventory coverage duration.
Demand sensing differs from traditional demand forecasting because it:
Answer: Incorporates near-real-time signals such as POS data to adjust short-horizon forecasts
Demand sensing uses high-frequency data (daily POS, shipment data) to fine-tune short-term forecasts, reducing the lag inherent in traditional weekly or monthly models.
Under which inventory replenishment policy does order quantity vary while the reorder point remains fixed?
Answer: Continuous review (Q) system
In a continuous review (Q) system, inventory is monitored constantly and a fixed order quantity is triggered whenever stock reaches the reorder point.
Which factor would cause a company to increase its target inventory turnover ratio?
Answer: Rising carrying costs and improved supplier responsiveness
Higher carrying costs make holding inventory more expensive, while faster supplier response reduces the need to hold large stocks, both driving higher turnover targets.
A causal forecasting model in demand planning differs from time-series methods because it:
Answer: Identifies and uses external variables that drive demand, such as economic indicators
Causal models (e.g., regression with explanatory variables) link demand to leading indicators like GDP growth, promotions, or weather, rather than pattern-extrapolating past demand alone.
The 'two-bin' replenishment system is a simple form of which inventory control approach?
Answer: Continuous review (reorder point) system
The two-bin system triggers replenishment when the first bin is empty, functioning as a visual reorder point system with a fixed reorder quantity equal to one bin's capacity.
Gross-to-net calculation in MRP converts gross requirements into net requirements by:
Answer: Subtracting on-hand inventory and scheduled receipts from gross requirements
Net requirements equal gross requirements minus projected on-hand inventory minus scheduled receipts, identifying only the true unfilled demand that requires a new order.