Page 174 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 7: Inventory Management

Safety Stock: The safety stock or buffer stock function concerns short-range variation in either Notes
demand or replenishment.
Stock-out Costs: Revenue lost because a lack of inventory results in a firm being unable to fill
all of its customer orders.

7.9 Review Questions

1. Define Decoupling.

2. What is Buffer Uncertainties?
3. Explain the Cost of Inventory with time.
4. Discuss Total Inventory Costs.
5. What is Holding (or Carrying) Costs?
6. Distinguish between Fixed and Variable Ordering Costs.

7. Do you agree with the statement that ordering costs are incurred in the purchase cycle? If
yes, give reason.
8. Write brief note on Planning Inventory.

9. Highlight the factors that contribute to manage uncertainty.
10. Throw some light on Inventory Management Policies.

Answers: Self Assessment

1. Geographical separation 2. Decoupling
3. Safety Stock or Buffer Stock 4. True

5. False 6. True
7. Reorder Point 8. Economic Order Quantity (EOQ)
9. Period Order Quantity (POQ) 10. True
11. False 12. False

13. Inventory 14. Managerial
15. MRP 16. False
17. True 18. True

7.10 Further Readings

Books Douglas M. Lambert, James R. Stock and Lisa M. Ellram, “Fundamentals of Logistics
Management,” McGRAW-Hill International Editions
Vinod V. Sople, “Logistics Management – The Supply Chain Imperative,” Pearson
Education

H. Kaushal, “Case Study Solutions – Materials Management,” Macmillan India Ltd.

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