OM 300 Exam 3 Questions with Answers
raw material inventory - -materials that are usually purchased but have yet to enter the
manufacturing process
-Work-in-process (WIP) inventory - -products or components that are no longer raw
materials but have yet to become finished products
-finished goods inventory - -an end item ready to be sold, but still an asset on the
company's books
-ABC analysis - -a method for dividing on-hand inventory into 3 classifications based on
annual dollar volume
-shrinkage - -retail inventory that is unaccounted for between receipt and sale
-pilferage - -a small amount of theft
-holding cost - -the cost to keep or carry inventory in stock
-ordering cost - -the cost of the ordering process
-setup cost - -the cost to prepare a machine or process for production
-setup time - -the time required to prepare a machine or process for production
-economic order quantity (EOQ) model - -an inventory-control technique that minimizes
the total of ordering and holding costs
-robust - -giving satisfactory answers even with substantial variation in the parameters
-lead time - -in purchasing systems, the time between placing an order and receiving it; in
production systems, the wait, move, queue, setup, and run times for each component
produced
-reorder point (ROP) - -the inventory level (point) at which action is taken to replenish the
stocked item
-safety stock (ss) - -extra stock to allow for uneven demand; a buffer
-production order quantity model - -an economic order quantity technique applied to
production orders
-quantity discount - -a reduced price for items purchased in large quantities
, -probabilistic model - -a statistical model applicable when product demand or any other
variable is not known but can be specified by means of a probability distribution
-service level - -the probability that demand will not be greater than supply during lead
time; it is the complement of the probability of a stockout
-single-period inventory model - -a system for ordering items that have little or no value
at the end of a sales period (perishables)
-fixed quantity system (Q) - -an ordering system with the same order amount each time
-perpetual inventory system - -a system that keeps track of each withdrawal or addition to
inventory continuously, so records are always current
-sales/operations planning - -a process of balancing resources and forecasted demand,
aligning an organization's competing demands from supply chain to final customer, while
linking strategic planning with operations over all planning horizons
-aggregate plan - -a plan that includes forecast levels for families of products of finished
goods, inventory, shortages, and changes in the workforce
-disaggregation - -the process of breaking an aggregate plan into greater detail
-master production schedule - -a timetable that specifies what is to be made and when
-chase strategy - -a planning strategy that sets production equal to forecast demand
-level scheduling - -maintaining a constant output rate, production rate, or workforce level
over the planning horizon
-mixed strategy - -a planning strategy that uses two or more controllable variables to set a
feasible production plan
-transportation method of linear programming - -a way of solving for the optimal solution
to an aggregate planning problem
-revenue/yield management - -capacity decisions that determine the allocation of
resources to maximize revenue or yield
-material requirements planning (MRP) - -a dependent demand technique that uses a bill-
of-material, inventory, expected receipts, and a master production schedule to determine
material requirements
-master production schedule (MPS) - -a timetable that specifies what is to be made and
when
raw material inventory - -materials that are usually purchased but have yet to enter the
manufacturing process
-Work-in-process (WIP) inventory - -products or components that are no longer raw
materials but have yet to become finished products
-finished goods inventory - -an end item ready to be sold, but still an asset on the
company's books
-ABC analysis - -a method for dividing on-hand inventory into 3 classifications based on
annual dollar volume
-shrinkage - -retail inventory that is unaccounted for between receipt and sale
-pilferage - -a small amount of theft
-holding cost - -the cost to keep or carry inventory in stock
-ordering cost - -the cost of the ordering process
-setup cost - -the cost to prepare a machine or process for production
-setup time - -the time required to prepare a machine or process for production
-economic order quantity (EOQ) model - -an inventory-control technique that minimizes
the total of ordering and holding costs
-robust - -giving satisfactory answers even with substantial variation in the parameters
-lead time - -in purchasing systems, the time between placing an order and receiving it; in
production systems, the wait, move, queue, setup, and run times for each component
produced
-reorder point (ROP) - -the inventory level (point) at which action is taken to replenish the
stocked item
-safety stock (ss) - -extra stock to allow for uneven demand; a buffer
-production order quantity model - -an economic order quantity technique applied to
production orders
-quantity discount - -a reduced price for items purchased in large quantities
, -probabilistic model - -a statistical model applicable when product demand or any other
variable is not known but can be specified by means of a probability distribution
-service level - -the probability that demand will not be greater than supply during lead
time; it is the complement of the probability of a stockout
-single-period inventory model - -a system for ordering items that have little or no value
at the end of a sales period (perishables)
-fixed quantity system (Q) - -an ordering system with the same order amount each time
-perpetual inventory system - -a system that keeps track of each withdrawal or addition to
inventory continuously, so records are always current
-sales/operations planning - -a process of balancing resources and forecasted demand,
aligning an organization's competing demands from supply chain to final customer, while
linking strategic planning with operations over all planning horizons
-aggregate plan - -a plan that includes forecast levels for families of products of finished
goods, inventory, shortages, and changes in the workforce
-disaggregation - -the process of breaking an aggregate plan into greater detail
-master production schedule - -a timetable that specifies what is to be made and when
-chase strategy - -a planning strategy that sets production equal to forecast demand
-level scheduling - -maintaining a constant output rate, production rate, or workforce level
over the planning horizon
-mixed strategy - -a planning strategy that uses two or more controllable variables to set a
feasible production plan
-transportation method of linear programming - -a way of solving for the optimal solution
to an aggregate planning problem
-revenue/yield management - -capacity decisions that determine the allocation of
resources to maximize revenue or yield
-material requirements planning (MRP) - -a dependent demand technique that uses a bill-
of-material, inventory, expected receipts, and a master production schedule to determine
material requirements
-master production schedule (MPS) - -a timetable that specifies what is to be made and
when
