SCM EXAM 3 KEY TERMS.docx - SCM EXAM 3 KEY TERMS CHAPTER 11 Inventory those stocks or items used to support production supporting activities and

SCM EXAM 3 KEY TERMS.docx - SCM EXAM 3 KEY TERMS CHAPTER 11...

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SCM EXAM 3 KEY TERMSCHAPTER 11Inventory: those stocks or items used to support production, supporting activities, and customer serviceCycle stock: components or products that received in bulk by a downstream partner, gradually used up, and then replenished again in bulk by the upstream partnerSafety stock: extra inventory that a company holds to protect itself against uncertainties in either demand or replenishment timeAnticipation inventory: inventory that is held in anticipation of customer demandHedge inventory: a form of inventory buildup to buffer against some event that may not happen. Hedge inventory planning involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair the company’s strategic initiativesTransportation inventory: inventory that is moving from one link in the supply chain to anotherSmoothing inventory: inventory that is used to smooth out differences between upstream production levels and downstream demandInventory drivers: business conditions that force companies to hold inventorySupply uncertainty: the risk of interruptions in the flow of components from upstream suppliersDemand uncertainty: the risk of significant and unpredictable fluctuations in downstream demandIndependent demand inventory: inventory items whose demand levels are beyond a company’s complete controlDependent demand inventory: inventory items whose demand levels are tied directly to a company’s planned production of another itemPeriodic review system: an inventory system that is used to manage independent demand inventory. Theinventory level for an item is checked at regular intervals and restocked to some predetermined levelService level: a term used to indicate the amount of demand to be met under conditions of demand and supply uncertaintyContinuous review system: 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 releasedEconomic order quantity (EOQ): the order quantity that minimizes annual holding and ordering costs for an item

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