WGU C720 Complete OA Prep Guide Exam Actual Complete
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Work-in-process (WIP)
These are partly finished parts, components, sub-assemblies, or modules.
Finished Goods
Items are ready to ship to the customer. No more work is required.
Replacement parts inventory
These are maintained to replace other parts in machinery or equipment as
those parts wear out
Supplies
Parts or materials are used to support the production process but not
usually a component of the product. These items, such as lubricant and
cutting tools, are consumed in the production process.
Transportation (pipeline):
The portion of inventory that is in the process of being shipped through the
distribution system.
,4 Types of Demand
o Peak
o Seasonal
o Unexpected
o Chase
Peak Demand
Demand which occurs in response to planned events such as advertising,
publicity or promotion. The release of a popular game franchise's latest
version often causes peak demand for a few days or weeks.
Seasonal Demand
Demand as shoppers adjust their purchase velocity in line with holidays,
especially Christmas. But Halloween, Thanksgiving and even St. Patrick's Day also
create seasonal demand for certain kinds of merchandise.
Unexpected Demand
Demand which occurs due to a usually-unexpected event. For example, an
underdog
school may upset a favorite during the NCAA's basketball tournament, causing a
run on their merchandise.
Chase Demand
Demand that occurs when a company has to adjust production by rates to match
demand by varying the workforce and using overtime. Companies vary the
workforce by adding or reducing the number of employees on duty at any given
time. And they may choose to provide overtime by asking workers to stay on the
job beyond their normally scheduled time.
,Safety Stock
A cushion of inventory to protect against unexpected demand. In this way, they
can continue to meet customer demand without delays.
Stock Out
Occurs when inventory is depleted.
Perpetual Inventory System
Continuously monitors inventory levels and is also called a continuous
review system. Requires human input (i.e. cashier) and the ordering of more
inventory is triggered by reorder point.
o Requires an exact inventory balance at all times
o Best for big businesses, retail stores, or banks
o High value and high volume
o Expensive to implement and maintain
Periodic Inventory System
Randomly monitors inventory levels and is also called the fixed order interval
system.
o Requires a physical count periodically
o Used when a supplier will only deliver at specific time intervals
o Low value and volume
o Used for small businesses
o Inexpensive to implement and maintain
, ABC analysis
Has been developed to determine which inventory items should receive the
highest level of control. By multiplying the dollar value of each item by its
annual usage, a dollar usage value can be obtained. Dollar usage follows the
Pareto Principle in that
frequently, only 20% of all the items account for 80% of the total dollar usage,
while the remaining items frequently account for only 20% of the dollar usage.
This principle leads to the classification, which is based on focusing efforts
where the payoff is highest
Pareto Principle
Only 20% of all the items account for 80% of the total dollar usage, while the
remaining items frequently account for only 20% of the dollar usage. This
principle leads to the ABC classification, which is based on focusing efforts
where the payoff is highest
Economic Order Quantity (EOQ)
For inventory that doesn't require production, when demand is constant and
known, when cost per unit does not depend on order quantity.
Most appropriate for retail stores or companies that order finished goods.
Economic Production Quantity (EPQ)
For inventory that will be used in production, When incremental ordering and
depletion of inventory is allowed, Also called production order quantity.
Most appropriate for manufacturing and production companies
Real Exam Questions And Correct Answers (Verified
Answers) Already Graded A+ || Guaranteed Success!!
Newest Exam | Just Released!! 2026-2027
Work-in-process (WIP)
These are partly finished parts, components, sub-assemblies, or modules.
Finished Goods
Items are ready to ship to the customer. No more work is required.
Replacement parts inventory
These are maintained to replace other parts in machinery or equipment as
those parts wear out
Supplies
Parts or materials are used to support the production process but not
usually a component of the product. These items, such as lubricant and
cutting tools, are consumed in the production process.
Transportation (pipeline):
The portion of inventory that is in the process of being shipped through the
distribution system.
,4 Types of Demand
o Peak
o Seasonal
o Unexpected
o Chase
Peak Demand
Demand which occurs in response to planned events such as advertising,
publicity or promotion. The release of a popular game franchise's latest
version often causes peak demand for a few days or weeks.
Seasonal Demand
Demand as shoppers adjust their purchase velocity in line with holidays,
especially Christmas. But Halloween, Thanksgiving and even St. Patrick's Day also
create seasonal demand for certain kinds of merchandise.
Unexpected Demand
Demand which occurs due to a usually-unexpected event. For example, an
underdog
school may upset a favorite during the NCAA's basketball tournament, causing a
run on their merchandise.
Chase Demand
Demand that occurs when a company has to adjust production by rates to match
demand by varying the workforce and using overtime. Companies vary the
workforce by adding or reducing the number of employees on duty at any given
time. And they may choose to provide overtime by asking workers to stay on the
job beyond their normally scheduled time.
,Safety Stock
A cushion of inventory to protect against unexpected demand. In this way, they
can continue to meet customer demand without delays.
Stock Out
Occurs when inventory is depleted.
Perpetual Inventory System
Continuously monitors inventory levels and is also called a continuous
review system. Requires human input (i.e. cashier) and the ordering of more
inventory is triggered by reorder point.
o Requires an exact inventory balance at all times
o Best for big businesses, retail stores, or banks
o High value and high volume
o Expensive to implement and maintain
Periodic Inventory System
Randomly monitors inventory levels and is also called the fixed order interval
system.
o Requires a physical count periodically
o Used when a supplier will only deliver at specific time intervals
o Low value and volume
o Used for small businesses
o Inexpensive to implement and maintain
, ABC analysis
Has been developed to determine which inventory items should receive the
highest level of control. By multiplying the dollar value of each item by its
annual usage, a dollar usage value can be obtained. Dollar usage follows the
Pareto Principle in that
frequently, only 20% of all the items account for 80% of the total dollar usage,
while the remaining items frequently account for only 20% of the dollar usage.
This principle leads to the classification, which is based on focusing efforts
where the payoff is highest
Pareto Principle
Only 20% of all the items account for 80% of the total dollar usage, while the
remaining items frequently account for only 20% of the dollar usage. This
principle leads to the ABC classification, which is based on focusing efforts
where the payoff is highest
Economic Order Quantity (EOQ)
For inventory that doesn't require production, when demand is constant and
known, when cost per unit does not depend on order quantity.
Most appropriate for retail stores or companies that order finished goods.
Economic Production Quantity (EPQ)
For inventory that will be used in production, When incremental ordering and
depletion of inventory is allowed, Also called production order quantity.
Most appropriate for manufacturing and production companies
