Test 2 - Inventory

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Created by: Lida

Safety inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period.
- True
- False
The appropriate level of safety inventory is determined by the uncertainty of both demand and supply and the desired level of cycle inventory.
- True
- False
Order fill rate is the fraction of product demand that is satisfied from product in inventory.
- True
- False
Safety inventory is carried because demand forecasts are accurate and a product shortage may result if the forecast demand exceeds the actual demand.
- True
- False
The expected shortage per replenishment cycle (ESC) is the average units of demand that are satisfied from inventory in stock per replenishment cycle.
- True
- False
A shortage occurs in a replenishment cycle if the demand during the lead time exceeds the ROP.
- True
- False
The fill rate increases and the cycle service level decreases as the safety inventory is increased.
- True
- False
For the same safety inventory, an increase in lot size increases the fill rate but not the cycle service level.
- True
- False
When using a continuous review policy, a manager has to account for the uncertainty of demand during the lead time and the review interval.
- True
- False
With continuous review, inventory is continuously tracked and an order for a lot size Q is placed at regular intervals of time.
- True
- False

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