Inventories of a company may be classfied into four categories as; raw materials and purchased parts ,partially completed goods (work in process), finished-goods inventories and goods-in-transit to warehouses or customers.
Supply Chaın Management (ENG) — Ünite 5 Soru-Cevap
Supply Chaın Management (ENG) (ISL455U) soru-cevapları.
We can classify inventory in four categories. What are these categories?
Why understocking and overstocking are important problems for a company?
Overstocking leads to an increase in the inventory costs while understocking leads to the loss of customers.
Consumables are type of inventory that are kept by many companies. Can you give examples of consumables?
Cleaning and hygiene materials like soap, detergent; stationery materials such as paper, envelopes, CD, pen are examples of consumables.
Please explain the meaning of dedicated inventory by an example.
A food producer may be keeping some of its canned food products as dedicated inventory to send these products to the countries where people are starving.
What is the reason of producing or purchasing in large lots for a factory?
Companies produce or purchase in large lots to exploit economies of scale in the
production, transportation, or purchasing process.
How would you persuade a stock manager who is keeping a lot of safety inventory to decrease its level to an acceptable level?
I may explain him the costs associated with keeping too much safety stock. The costs that arise may be the cost of money tied in inventory, rental cost of new storage space arising from the increased inventory amount, warehouse personnel wages, security costs, and the costs of obsolescence or value decrease.
There are some costs associated with inventories. Ordering cost is one of them. Explain ordering costs with examples.
Expenditures for doing paperwork such as conducting market research, collecting and processing orders, determining the amount of inventory required, preparing invoices, transportation costs, controlling goods in terms of quality and quantity, moving goods to the buffer stock area are examples of ordering costs.
When difficulties may arise in determining
the inventory value of purchases?
When the suppliers are international companies, the products' value can be evaluated according to the currency of the manufacturing country. Since fluctuations may occur in the value of the product compared to the currency of the country of purchase determining the value of the stocks may be difficult.
There are various inventory holding costs for
businesses. These
Inventory holding costs are divided into four
classes. These are; purchasing costs, ordering costs, cost of carrying inventory
and cost of being out of stock.
Different department may be in conflict because of different views about inventory cost. Which departments may be in conflict and why?
Inventory in a company may effect several departments other than the production department. Production department ve finance department have different views about inventory costs. Production department wants to meet the customer demand fastly and does not want any interruption of production process. But inventory is an investment that requires financing this investment and finance department may not want to tie the money to the stocks.
Some risks associated with inventories may occur and these risks may lead to inventory risk costs. Please give examples for this type of risks.
There may be damages on the stocked products. The product may be out of fashion because of the obsolescence. The technology may be changing very fastly so the value of the product may decrease. Shrinkage may occur. These are examples of inventory risk costs.
If a company wants to use a simple model to determine a fixed order
quantity for inventory management, which model would you suggest?
I would suggest the company to use Economic Order Quantitiy Model. It is the is the simplest model used to determine a fixed order quantity that minimizes the total of annual purchase, ordering, and inventory handling costs for companies.
Based on EOQ Model which costs must be known to calculate annual total
cost?
We have to know
- Annual Purchase Cost
- Annual Ordering Cost
- Annual Inventory Holding Cost
A factory that uses Economic Production Quantity Model (EPQ) to determine a fixed production quantity ,expects to minimize some costs. Please explain these costs.
The factory management wants to minimize the sum of production set-up costs, production costs and inventory holding costs.
A company prefers to manufacture the parts needed in the end-product by itself instead of ordering from a supplier. Which model can be used by this company to determine a fixed production quantity? What is the reason of using this model?
Economic Production Quantity Model (EPQ) can be used by this company. Because this model is used to minimize the sum of production set-up costs, production costs and inventory holding costs.Since this company is not ordering the parts from somewhere and prefering to produce itself it must minimize the costs.
A company may have different type inventories. Please explain the type of inventories with examples.
There are 5 type of inventories that can be stocked by companies.These are; raw material stocks like cotton, wheat, iron; semi-finished product stocks like the doors of an automobile; finished product stocks like automobiles, durable goods; consumables like CDs, papers and service, maintenance, replacement parts and spare parts.
If a factory manager wants to decide the amount of reorder points, which factors will be effective in determining the reorder points?
Demand rate, lead time, the degree of demand and/or lead time variability and
the degree of acceptable stockouts are the factors that determine the reordering point for inventories.
Which inventory management model is suitable for supermarket chains like Migros, Çağdaş and discount chains like BİM,A101 that have thousands of stores in different geographies?
The multi-echelon inventory is suitable for different situations like the existence of many products, several stages and many locations. In our question there are many locations that many products must be delivered that make it necesarry to use the multi-echelon inventory management
Which approach can you suggest to a factory manager that wants to coordinate the decisions made at different levels of the supply chain?
Materials requirement planning (MRP) can be suggested to the factory manager since it is an approach to coordinate the decisions made at different levels
of the supply chain. Controlling not only what
item is purchased and in what quantities, but also
the timing of its arrival through computerized
systems is called materials requirements planning
If you were to explain the disadvantages of Materials Requirement Planning to a trainee in a factory which disadvantages would you mention?
MRP assumes that the quantity of demand and lead times are
known. These data may be lacking. So unclear or unknown data about these limit the efficiency of MRP because of the fact that replenishment of the
order dates is determined based on the demand and lead times. Another disadvantage I would declare would be the fact that MRP does not consider the production capacity.