Inventory Management Flashcards
6 cards from real Supply Chain and Logistics practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Inventory Management flashcards as text
What is a reorder point (ROP)?
Answer: The inventory level at which a new order should be placed
The reorder point is the inventory level that triggers a new purchase order, calculated using lead time and average demand.
Which inventory system continuously tracks stock levels and triggers orders when needed?
Answer: Continuous review system
A continuous review (Q) system monitors inventory in real time and places orders whenever stock falls to the reorder point.
What is the carrying cost of inventory?
Answer: Total cost of holding inventory over a period
Carrying cost includes storage, insurance, obsolescence, taxes, and capital opportunity costs associated with holding inventory.
Which approach keeps inventory levels extremely low by receiving goods only as they are needed?
Answer: Just-in-Time (JIT)
Just-in-Time inventory reduces waste and holding costs by timing deliveries to match production or sales demand precisely.
What does the term 'shrinkage' refer to in retail inventory?
Answer: Inventory loss due to theft, damage, or administrative error
Shrinkage is the difference between recorded inventory and actual physical inventory, caused by theft, spoilage, or counting errors.
In a two-bin inventory system, what triggers a new order?
Answer: When the second bin starts being used
In a two-bin system, consumption from the second bin signals that a replenishment order should be placed to refill both bins.