BUS 370 - EXAM 3 (FAVRE)
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1. Inventory: Those stocks or items used to support production (raw materials and work-in process items),
supporting activities (maintenance, repair and operations) and customer service (finished goods and spare parts)
2. Cycle Stock Inventories: Components or products that are received in bulk by a downstream partner,
gradually used up, and then replenished
3. Safety Stock Inventories: Extra inventory that companies hold to protect themselves against uncertainties
in either demand or replenishment time
4. Anticipation Inventories: Held in anticipation of customer demand
5. Hedging Inventories: Form of inventory buildup to buffer against a potential event (strike, price increase,
civil unrest). Involves speculation to hedge against events that could severely impact the company's strategic initiatives.
6. Transportation Inventories: Inventories that is moving from one link in the supply chain to another.
Inventory that is "in the pipeline."
7. Smoothing Inventories: Inventories used to smooth out differences between upstream production levels
and downstream demand.
8. safety stock, hedge inventory driver: Uncertainty in supply or demand
9. Cycle stock driver: Mismatch between downstream partner's demand and most efficient production or
shipment volumes for upstream partner
10. Smoothing inventory driver: Mismatch between downstream demand levels and upstream produc-
tion capacity
11. Anticipation inventory, transportation inventory driver: Mismatch between timing of
customer demand and supply chain lead times
12. Independent Demand Inventory: Inventory items with demand levels that are beyond a company's
complete control.
13. Dependent Demand Inventory: inventory items whose demand levels are tied directly to a compa-
ny's planned production of another item
14. Continuous Review: An inventory system used to manage independent demand inventory. The inventory
level for an item is constantly monitored, and when the reorder point is reached, an order is released.
15. Invested funds, storage space, insurance: Costs that increase as order size go up
16. Ordering, stock-out, transportation, Potential for quantity discounts: Costs that
decrease as order size goes up
17. Variance: the fact or quality of being different, divergent, or inconsistent
18. Single Period Inventory Systems: A system used when demand occurs in only a single point in time
19. Shortage Cost: The value of the item IF demanded minus the item cost
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, BUS 370 - EXAM 3 (FAVRE)
Study online at https://quizlet.com/_7htk3d
20. Excess Cost: The item cost and disposal cost minus the salvage value
21. Bullwhip Effect: According to APICS, "an extreme change in the supply position upstream in a supply chain
generated by a small change in demand downstream in the supply chain."
22. Inventory Pooling: Holding safety stock in a single location and multiple locations then share safety stock
inventories to lower overall holding costs by reducing overall safety stock levels.
23. ABC Classification: Method for classifying inventory according to several criteria, including its dollar value
to the company
24. Planning and Control: A set of tactical and execution level business activities that includes master sched-
uling, material requirements planning, and some form of production activity control and vendor order management
25. Sales and Operations Planning (S&OP): Establishes overall production, workforce, and inventory
levels (tactical capacity planning)
26. Master Scheduling: Determines when specific products will be made, when specific products will be
made, when specific customer orders will be filled, and what products/capacities are still available to meet new demand
27. Material Requirements Planning (MRP): Calculates the timing and quantities of material orders
needed to support the master schedule
28. Production Activity Control (PAC): Assured that in-house manufacturing takes place according to
plan; also helps manufacturing managers identify potential problems and take corrective actions
29. Vendor Order Management: Assured that materials ordered from supply chain partners are received
when needed; also helps purchasing managers identify potential problems and take corrective actions
30. Master Production Scheduling (MPS): A detailed planning process that tracks production output
and matches this output to actual customer orders
31. Projected Ending Inventory: Estimated inventory level at the end of each time period
32. Available to Promise (ATP): Indicates the number of units that are available for sale each week, given
those that have already been promised to customers
33. MRP: A planning process that translates the MPS into planned orders for the actual parts and components
needed to produce the MPS items
34. Bill of Material (BOM): A listing of the sub assemblies, intermediates, parts, and raw materials that go
into a parent assembly showing the quantity of each required to make an assembly
35. Product Structure Tree: A record or graphical rendering that shows how the components in the BOM
are put together to make the level 0 item
36. Exploding the BOM: The process of working backward from the master production schedule for a level 0
item to determine the quantity and timing of orders for the various subassemblies and components
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Study online at https://quizlet.com/_7htk3d
1. Inventory: Those stocks or items used to support production (raw materials and work-in process items),
supporting activities (maintenance, repair and operations) and customer service (finished goods and spare parts)
2. Cycle Stock Inventories: Components or products that are received in bulk by a downstream partner,
gradually used up, and then replenished
3. Safety Stock Inventories: Extra inventory that companies hold to protect themselves against uncertainties
in either demand or replenishment time
4. Anticipation Inventories: Held in anticipation of customer demand
5. Hedging Inventories: Form of inventory buildup to buffer against a potential event (strike, price increase,
civil unrest). Involves speculation to hedge against events that could severely impact the company's strategic initiatives.
6. Transportation Inventories: Inventories that is moving from one link in the supply chain to another.
Inventory that is "in the pipeline."
7. Smoothing Inventories: Inventories used to smooth out differences between upstream production levels
and downstream demand.
8. safety stock, hedge inventory driver: Uncertainty in supply or demand
9. Cycle stock driver: Mismatch between downstream partner's demand and most efficient production or
shipment volumes for upstream partner
10. Smoothing inventory driver: Mismatch between downstream demand levels and upstream produc-
tion capacity
11. Anticipation inventory, transportation inventory driver: Mismatch between timing of
customer demand and supply chain lead times
12. Independent Demand Inventory: Inventory items with demand levels that are beyond a company's
complete control.
13. Dependent Demand Inventory: inventory items whose demand levels are tied directly to a compa-
ny's planned production of another item
14. Continuous Review: An inventory system used to manage independent demand inventory. The inventory
level for an item is constantly monitored, and when the reorder point is reached, an order is released.
15. Invested funds, storage space, insurance: Costs that increase as order size go up
16. Ordering, stock-out, transportation, Potential for quantity discounts: Costs that
decrease as order size goes up
17. Variance: the fact or quality of being different, divergent, or inconsistent
18. Single Period Inventory Systems: A system used when demand occurs in only a single point in time
19. Shortage Cost: The value of the item IF demanded minus the item cost
1/6
, BUS 370 - EXAM 3 (FAVRE)
Study online at https://quizlet.com/_7htk3d
20. Excess Cost: The item cost and disposal cost minus the salvage value
21. Bullwhip Effect: According to APICS, "an extreme change in the supply position upstream in a supply chain
generated by a small change in demand downstream in the supply chain."
22. Inventory Pooling: Holding safety stock in a single location and multiple locations then share safety stock
inventories to lower overall holding costs by reducing overall safety stock levels.
23. ABC Classification: Method for classifying inventory according to several criteria, including its dollar value
to the company
24. Planning and Control: A set of tactical and execution level business activities that includes master sched-
uling, material requirements planning, and some form of production activity control and vendor order management
25. Sales and Operations Planning (S&OP): Establishes overall production, workforce, and inventory
levels (tactical capacity planning)
26. Master Scheduling: Determines when specific products will be made, when specific products will be
made, when specific customer orders will be filled, and what products/capacities are still available to meet new demand
27. Material Requirements Planning (MRP): Calculates the timing and quantities of material orders
needed to support the master schedule
28. Production Activity Control (PAC): Assured that in-house manufacturing takes place according to
plan; also helps manufacturing managers identify potential problems and take corrective actions
29. Vendor Order Management: Assured that materials ordered from supply chain partners are received
when needed; also helps purchasing managers identify potential problems and take corrective actions
30. Master Production Scheduling (MPS): A detailed planning process that tracks production output
and matches this output to actual customer orders
31. Projected Ending Inventory: Estimated inventory level at the end of each time period
32. Available to Promise (ATP): Indicates the number of units that are available for sale each week, given
those that have already been promised to customers
33. MRP: A planning process that translates the MPS into planned orders for the actual parts and components
needed to produce the MPS items
34. Bill of Material (BOM): A listing of the sub assemblies, intermediates, parts, and raw materials that go
into a parent assembly showing the quantity of each required to make an assembly
35. Product Structure Tree: A record or graphical rendering that shows how the components in the BOM
are put together to make the level 0 item
36. Exploding the BOM: The process of working backward from the master production schedule for a level 0
item to determine the quantity and timing of orders for the various subassemblies and components
2/6
