• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

Card Range To Study



Play button


Play button




Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

36 Cards in this Set

  • Front
  • Back
cost tradeoffs w/ respect to inventory


price, product, promotion, place Cust Serv


inventory carrying costs

lot quanitity costs

order processing and info costs

trans costs

warehousing costs

place cust serv levels

Reasons for holding inventory

maintaining customer service requirement

leverage economies of scale for production

take advantage of purchase discounts

take advantage of trans discounts

act as a buffer for demand variability and lead time variability

hedge against risk

high inventory levels yield....

better customer service

stockout protection

short lead times

lower costs per unit purchases, made, trasported

large lot production and transportation economies

quantity discounts and inflation hedging

low inventory levels yield

lower holding costs

easier and more accurate control of inventory

a focus on quality execution

Economic Order Quantity

square root of 2PD divided by CV


the ordering cost (dollars per order)

annual demand or usage of the product (number of units)
annual inventory carrying costs (as a % of product cost)
avg product cost of one unit of inventory
EOQ - lowest total cost
curve sloping down and back up again
ordering cost

curve sloping down

inventory carrying cost
diagonal line from zero
inventory cost
c * v * eoq/2
ordering cost
p * d/eoq
two major sources of uncertainty


performance cycle

we hold ______ to buffer against uncertainties
safety stocks
fixed order point, fixed order quantity model

determine an inventory level at which to reoder the EOQ

depending on demand, the interval between orders varies, but not the quantity orderd

fixed order interval model

determine a fixed order cycle

depending on demand the quantity ordered varies but not the interval between orders

requires forecasting of demand for next order cycle

main differences between the order models

data requirements

safety stock requirements

factors to consider under uncertainty

fixed order point, fixed order quant model

fixed order interval model

data requirements

fixed order point, fixed quant model requires constant monitoring of inventory

fixed order interval model requires reliable demand forecasts for the next order interval, but only periodic inventory reviews

safety stock requirements

as the fixed order, fixed order quant model is triggered by quantity (reorder point), safety stock is needed to protect during order lead times only, as further orders can be placed at any time

the fixed order interval model is triggered by time, wherefore safety stock needs to protect order lead time, plus the entire next order interval

inventory reduction strats


inventory centralization


supply chain inventory coordination

reasons for forecasting

increasing customer satisfaction

scheduling production more efficiently

lowering safety stock requirement

reducing product obsolescence costs

imporoving pricing and promotion mang

reducing stockouts

"square root" law (meister rule)

x2 = x1 * sq rt of (n2/n1)

number of existing faciliites

number of future facilities
total inventory in existing facilites
total inventory in future facillites
principle of postponement





intra versus inter - organizational

supply chain inventory coordination




JIT Just in time

SMI Supplier Managed Inventory


QR quick response

CR continuous replenishment

ECR efficient consumer response

VMI vendor managed inventory

CPFR collaborative planning forecasting and replenishment

drivers of inventory growth

customer pressure for service

SKU proliferation

scrambled merchandising

growth and variability of demand

length and variablilty of lead time

lack of information

number of warehousing location

diffused inventory mang responsibility

symptoms of poor inventory mang

high inventory levels and frequent stockouts

inventory transfers between units in firm

time needed to find items

high variance in turnover rate for different stocking locations

frequent sales to reduce inventory levels

suppliers with long or ureliable delivery times

purchasing based on quantity discounts

buyers evaluated on basis of purchase price