Question 1

What is an explanation offered for why firms have not historically tracked stockouts very well?

Accepted Answer

A) There is no agreed upon definition of stockouts. 
B) There is no way to track stockouts. 
C) Stockouts occur after the fact. 
D) Stockouts are difficult to track.

Question 2

A goal of any supply chain manager is to reduce the level of safety inventory required regardless of the effect on product availability.

Accepted Answer

A) True 
 B)False

Question 3

Manufacturer-driven substitution increases overall profitability for the manufacturer by allowing some aggregation of demand,which reduces the inventory requirements for the same level of availability.

Accepted Answer

A) True 
 B)False

Question 4

The coefficient of variation measures

Accepted Answer

A) the accuracy of the demand forecast. 
B) the size of the uncertainty relative to demand. 
C) the relevance of cycle inventory to demand. 
D) the relative certainty of the forecast.

Question 5

Which approach to aggregation has the goal of moving product differentiation as close to the pull phase of the supply chain as possible?

Accepted Answer

A) Information centralization 
B) Specialization 
C) Product substitution 
D) Postponement

Question 6

Aggregation reduces the standard deviation of demand only if demand across the regions being aggregated is not perfectly positively correlated.

Accepted Answer

A) True 
 B)False

Question 7

Which approach to aggregation would stock the fast-moving items at decentralized locations close to the customer and slow-moving items at a centralized location?

Accepted Answer

A) Information centralization 
B) Specialization 
C) Product substitution 
D) Component commonality

Question 8

Periodic replenishment policies require more safety inventory than continuous review policies.

Accepted Answer

A) True 
 B)False

Question 9

As the uncertainty of supply or demand ________,the required level of safety inventories ________.

Accepted Answer

A) grows;increases 
B) increases;decreases 
C) decreases;grows 
D) decreases;increases

Question 10

The ability of a supply chain to delay product differentiation or customization until closer to the time the product is sold is

Accepted Answer

A) information centralization. 
B) specialization. 
C) product substitution. 
D) postponement.

Question 11

With periodic review,inventory status is checked at regular intervals and an order is placed to raise the inventory level to a specified threshold.

Accepted Answer

A) True 
 B)False

Question 12

Echelon inventory at the retailer is just the inventory that is physically present at the retailer.

Accepted Answer

A) True 
 B)False

Question 13

Which use of common components in a variety of products has been a very effective supply chain strategy to exploit aggregation and reduce component inventories?

Accepted Answer

A) Information centralization 
B) Specialization 
C) Product substitution 
D) Component commonality

Question 14

Figure 1: Inventory Profile for Periodic Review Policy
 
-What does the letter A represent in Figure 1?

Accepted Answer

A) Demand during lead time 
B) Demand during review period 
C) Order up to level 
D) Cycle stock

Question 15

Under a periodic review policy,the OUL and the time are both fixed,but the replenishment lot size is variable.

Accepted Answer

A) True 
 B)False

Question 16

Given a lot size of Q (which is also the average demand in a replenishment cycle),

Accepted Answer

A) the fraction of demand lost is thus ESC + Q. 
B) the fraction of demand lost is thus ESC - Q. 
C) the fraction of demand lost is thus ESC/Q. 
D) the fraction of demand lost is thus ESC × Q.

Question 17

Weekly demand for 12" hot dogs at Mutt's Amazing Dogs is normally distributed with a mean of 2850 and a standard deviation of 425.The store manager continuously monitors inventory and currently orders 500 hot dogs each time the inventory drops to 6000 dogs.The manufacturer currently takes two weeks to fill an order.How much safety inventory does the store carry?

Accepted Answer

The answer of Weekly demand for 12" hot dogs at...

Question 18

Safety inventory is carried because

Accepted Answer

A) demand forecasts are accurate. 
B) demand forecasts are uncertain. 
C) adequate supplies are available. 
D) excess product was manufactured.

Question 19

The distinction between product fill rate and order fill rate is

Accepted Answer

A) not significant in a single product situation. 
B) significant in a single product situation. 
C) not significant when a firm is selling multiple products. 
D) order fill rates tend to be higher than product fill rates.

Question 20

Scenario 12.2 - Hamsterdam
Marlo Stanfield's operation also uses large quantities of prepaid cell phones,on average 1500 per week with a standard deviation of 145.The lead time for their own brand of prepaid cell phones is three weeks and they have a lot size of 350 phones.To ensure they never run out,they keep a safety stock of 500 phones with Proposition Joe.
-What safety stock should be held to put the expected shortage per cycle at 5 phones?

Accepted Answer

A) 418 phones 
B) 433 phones 
C) 462 phones 
D) 487 phones

Exam 12: Managing Uncertainty in a Supply Chain: Safety Inventory

What is an explanation offered for why firms have not historically tracked stockouts very well?

A goal of any supply chain manager is to reduce the level of safety inventory required regardless of the effect on product availability.

Manufacturer-driven substitution increases overall profitability for the manufacturer by allowing some aggregation of demand,which reduces the inventory requirements for the same level of availability.

The coefficient of variation measures

Which approach to aggregation has the goal of moving product differentiation as close to the pull phase of the supply chain as possible?

Aggregation reduces the standard deviation of demand only if demand across the regions being aggregated is not perfectly positively correlated.

Which approach to aggregation would stock the fast-moving items at decentralized locations close to the customer and slow-moving items at a centralized location?

Periodic replenishment policies require more safety inventory than continuous review policies.

As the uncertainty of supply or demand ,the required level of safety inventories .

The ability of a supply chain to delay product differentiation or customization until closer to the time the product is sold is

With periodic review,inventory status is checked at regular intervals and an order is placed to raise the inventory level to a specified threshold.

Echelon inventory at the retailer is just the inventory that is physically present at the retailer.

Which use of common components in a variety of products has been a very effective supply chain strategy to exploit aggregation and reduce component inventories?

Figure 1: Inventory Profile for Periodic Review Policy -What does the letter A represent in Figure 1?

Under a periodic review policy,the OUL and the time are both fixed,but the replenishment lot size is variable.

Given a lot size of Q (which is also the average demand in a replenishment cycle) ,

Safety inventory is carried because

The distinction between product fill rate and order fill rate is