INVENTORY CONTROL VIVA QUESTIONS AND ANSWERS

Q: What is inventory control?

A: Inventory control refers to the process of managing the inventory of goods or products in order to ensure that the right quantity is available at the right time, and at the right cost.

Q: What are the main objectives of inventory control?

A: The main objectives of inventory control are to ensure that there is enough inventory to meet customer demand, to minimize the cost of holding inventory, and to optimize the use of resources.

Q: What are the different types of inventory?

A: The different types of inventory include raw materials, work-in-progress, finished goods, and maintenance, repair, and operating (MRO) inventory.

Q: What is reorder point?

A: Reorder point is the level of inventory at which a new order needs to be placed to ensure that there is enough inventory to meet customer demand before the next order arrives.

Q: What is safety stock?

A: Safety stock is the extra inventory that is held in order to protect against unexpected increases in demand or delays in delivery.

Q: What is economic order quantity (EOQ)?

A: Economic order quantity (EOQ) is the optimal order quantity that minimizes the total cost of ordering and holding inventory.

Q: What are the different inventory costing methods?

A: The different inventory costing methods include first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average cost.

Q: What is just-in-time (JIT) inventory management?

A: Just-in-time (JIT) inventory management is a system in which inventory is received only when it is needed, and in the exact quantity needed, to minimize the cost of holding inventory.

Q: What is the role of technology in inventory control?

A: Technology plays a critical role in inventory control by providing real-time visibility of inventory levels, automating inventory tracking and management, and enabling data analysis to optimize inventory management practices.

Q: What is the ABC analysis?

A: The ABC analysis is a technique used to categorize inventory items based on their importance. The items are divided into three categories - A, B, and C, based on their contribution to the total inventory cost.

Q: What is lead time in inventory control?

A: Lead time is the time it takes to receive an order after it has been placed. Lead time is an important factor in inventory control as it helps to determine the reorder point and safety stock levels.

Q: What is the role of forecasting in inventory control?

A: Forecasting plays a critical role in inventory control by providing estimates of future demand for inventory items. This information helps businesses to plan for future inventory needs, set reorder points, and determine safety stock levels.

Q: What is the bullwhip effect?

A: The bullwhip effect is a phenomenon in supply chain management in which small changes in demand at the end of the supply chain lead to large swings in inventory levels and orders throughout the supply chain.

Q: What are some common challenges in inventory control?

A: Some common challenges in inventory control include inaccurate forecasting, stockouts, excess inventory, inefficient order processing, and inefficient inventory management practices.

Q: What is vendor-managed inventory (VMI)?

A: Vendor-managed inventory (VMI) is a system in which the supplier manages the inventory levels at the customer's location. The supplier is responsible for monitoring inventory levels and replenishing the inventory as needed.

Q: How can businesses improve their inventory control practices?

A: Businesses can improve their inventory control practices by implementing technology solutions, using data analysis to optimize inventory management, using lean inventory management principles, and collaborating with suppliers and customers to improve supply chain efficiency.

Q: What is the role of inventory turnover in inventory control?

A: Inventory turnover is a measure of how quickly inventory is sold and replaced over a period of time. It is an important metric in inventory control as it helps businesses to determine if they are holding too much inventory, which can result in excess carrying costs.

Q: What are some common inventory carrying costs?

A: Common inventory carrying costs include the cost of storage, insurance, taxes, obsolescence, depreciation, and handling.

Q: What is a perpetual inventory system?

A: A perpetual inventory system is a system in which inventory levels are continuously monitored and updated in real-time, using technology solutions such as barcode scanning or radio-frequency identification (RFID).

Q: What is a periodic inventory system?

A: A periodic inventory system is a system in which inventory levels are manually counted at specific intervals, such as monthly or quarterly.

Q: What is the difference between safety stock and reorder point?

A: Safety stock is the extra inventory that is held to protect against unexpected increases in demand or delays in delivery, while reorder point is the level of inventory at which a new order needs to be placed to ensure that there is enough inventory to meet customer demand before the next order arrives.

Q: What is the role of service level in inventory control?

A: Service level is a measure of the percentage of customer demand that can be met from available inventory. The higher the service level, the lower the risk of stockouts. The service level is an important factor in inventory control as it helps businesses to balance the cost of holding inventory with the risk of stockouts.

Q: What is the role of lot sizing in inventory control?

A: Lot sizing is the process of determining the optimal quantity of items to order in a single batch. Lot sizing is an important factor in inventory control as it affects the cost of ordering and holding inventory.

Q: What is the role of lead time variability in inventory control?

A: Lead time variability refers to the variability in the time it takes to receive an order after it has been placed. Lead time variability is an important factor in inventory control as it affects the level of safety stock that needs to be held to protect against stockouts.

Q: What is a stock keeping unit (SKU)?

A: A stock keeping unit (SKU) is a unique identifier assigned to each inventory item. SKUs are used to track inventory levels, sales, and replenishment.

Q: What is the role of inventory accuracy in inventory control?

A: Inventory accuracy refers to the degree to which the actual inventory levels match the recorded inventory levels. Inventory accuracy is critical in inventory control as inaccurate inventory levels can lead to stockouts, excess inventory, and inefficient inventory management practices.

Q: What is the role of inventory turnover ratio in inventory control?

A: The inventory turnover ratio is a measure of how many times inventory is sold and replaced over a period of time. A high inventory turnover ratio indicates that inventory is being sold quickly, while a low inventory turnover ratio indicates that inventory is not selling quickly and may be tying up resources.

Q: What is the role of the reorder quantity in inventory control?

A: The reorder quantity is the amount of inventory that needs to be ordered to bring inventory levels back up to the reorder point. The reorder quantity is an important factor in inventory control as it affects the cost of ordering and holding inventory.

Q: What is the role of economic order quantity (EOQ) in inventory control?

A: Economic order quantity (EOQ) is a formula used to determine the optimal quantity of inventory to order in a single batch. EOQ is an important factor in inventory control as it helps businesses to balance the cost of ordering and holding inventory.

Q: What is a backorder?

A: A backorder occurs when a customer places an order for an item that is currently out of stock. The order is then filled when the item becomes available again.

Q: What is a stockout?

A: A stockout occurs when there is no inventory available to fulfill a customer order. Stockouts can lead to lost sales, decreased customer satisfaction, and damage to a business's reputation.

Q: What is the role of safety stock in inventory control?

A: Safety stock is the extra inventory that is held to protect against unexpected increases in demand or delays in delivery. Safety stock is an important factor in inventory control as it helps businesses to avoid stockouts and maintain high levels of customer service.

Q: What is the role of carrying cost in inventory control?

A: Carrying cost is the cost of holding inventory, including the cost of storage, insurance, taxes, obsolescence, depreciation, and handling. Carrying cost is an important factor in inventory control as it affects the overall cost of inventory management.

Q: What is a reorder point?

A: The reorder point is the level of inventory at which a new order needs to be placed to ensure that there is enough inventory to meet customer demand before the next order arrives. The reorder point is an important factor in inventory control as it helps businesses to avoid stockouts.

Q: What is the difference between lead time and cycle time in inventory control?

A: Lead time is the time it takes to receive an order after it has been placed, while cycle time is the time it takes to produce a product or complete a process. Lead time and cycle time are both important factors in inventory control as they affect the timing and frequency of orders.

Q: What is the role of demand forecasting in inventory control?

A: Demand forecasting is the process of predicting future demand for a product. Demand forecasting is an important factor in inventory control as it helps businesses to determine the optimal level of inventory to hold in order to meet customer demand.

Q: What is a stock transfer?

A: A stock transfer occurs when inventory is moved from one location to another within a business. Stock transfers are often used to redistribute inventory among different locations or to move inventory to locations where it is needed.

Q: What is the role of vendor managed inventory (VMI) in inventory control?

A: Vendor managed inventory (VMI) is a system in which a supplier manages the inventory levels of a customer. VMI is an important factor in inventory control as it can help businesses to reduce inventory holding costs and improve inventory accuracy.

Q: What is the role of barcoding in inventory control?

A: Barcoding is a technology solution used in inventory control to track inventory levels and movements. Barcoding can help businesses to improve inventory accuracy, reduce errors, and streamline inventory management processes.

Q: What is the role of RFID (radio frequency identification) in inventory control?

A: RFID is a technology solution used in inventory control to track inventory levels and movements using radio waves. RFID can provide real-time tracking of inventory, which can help businesses to improve inventory accuracy, reduce errors, and streamline inventory management processes.

Q: What is the role of ABC analysis in inventory control?

A: ABC analysis is a technique used in inventory control to classify inventory items based on their value and importance. This helps businesses to prioritize their inventory management efforts and focus on the items that are most critical to their operations.

Q: What is the role of inventory aging in inventory control?

A: Inventory aging refers to the length of time that inventory has been held in stock. Inventory aging is an important factor in inventory control as it can help businesses to identify slow-moving inventory and take action to reduce inventory holding costs.

Q: What is the role of obsolescence in inventory control?

A: Obsolescence refers to the risk that inventory will become outdated or unsellable due to changes in technology, fashion, or customer demand. Obsolescence is an important factor in inventory control as it can lead to excess inventory and increased inventory holding costs.

Q: What is the role of cross-docking in inventory control?

A: Cross-docking is a logistics solution used in inventory control to minimize the time that inventory spends in storage. Cross-docking involves receiving incoming inventory and immediately routing it to outbound shipments, without storing it in a warehouse. This can help businesses to reduce inventory holding costs and improve order fulfillment times.

Q: What is the role of perpetual inventory systems in inventory control?

A: Perpetual inventory systems are inventory management systems that continuously track inventory levels in real-time. Perpetual inventory systems can help businesses to improve inventory accuracy, reduce errors, and streamline inventory management processes.

Q: What is the role of batch tracking in inventory control?

A: Batch tracking is a system used in inventory control to track the movement of inventory by specific production batches or lots. Batch tracking can help businesses to improve inventory accuracy, reduce errors, and trace inventory in the event of a product recall or quality issue.

Q: What is the role of inventory turnover in inventory control?

A: Inventory turnover is a measure of how quickly a business sells its inventory and replaces it with new inventory. Inventory turnover is an important factor in inventory control as it can help businesses to optimize inventory levels and minimize inventory holding costs.

Q: What is the role of consignment inventory in inventory control?

A: Consignment inventory is a system in which a supplier provides inventory to a customer, but retains ownership of the inventory until it is sold. Consignment inventory is an important factor in inventory control as it can help businesses to reduce inventory holding costs and improve inventory accuracy.

Q: What is the role of drop shipping in inventory control?

A: Drop shipping is a system in which a supplier ships products directly to a customer, rather than delivering them to a warehouse or retail store. Drop shipping is an important factor in inventory control as it can help businesses to reduce inventory holding costs and improve order fulfillment times.

Q: What is the role of safety stock in inventory control?

A: Safety stock is the amount of extra inventory that a business holds to protect against unexpected fluctuations in demand or supply chain disruptions. Safety stock is an important factor in inventory control as it helps businesses to avoid stockouts and ensure that they can meet customer demand.

Q: What is the role of economic order quantity (EOQ) in inventory control?

A: Economic order quantity (EOQ) is a formula used in inventory control to determine the optimal order quantity that will minimize the total cost of ordering and holding inventory. EOQ is an important factor in inventory control as it helps businesses to balance the costs of inventory holding and ordering.

Q: What is the role of just-in-time (JIT) inventory management in inventory control?

A: Just-in-time (JIT) inventory management is a system in which inventory is delivered as it is needed, rather than being held in stock. JIT inventory management is an important factor in inventory control as it can help businesses to reduce inventory holding costs and improve order fulfillment times.

Q: What is the role of inventory accuracy in inventory control?

A: Inventory accuracy refers to the degree to which a business's inventory records match the actual physical inventory. Inventory accuracy is an important factor in inventory control as it helps businesses to avoid stockouts, reduce inventory holding costs, and improve order fulfillment times.

Q: What is the role of inventory visibility in inventory control?

A: Inventory visibility refers to the ability to see and track inventory levels and movements across the supply chain. Inventory visibility is an important factor in inventory control as it helps businesses to optimize inventory levels, reduce inventory holding costs, and improve order fulfillment times.

Q: What is the role of lead time in inventory control?

A: Lead time is the amount of time that it takes for a business to receive inventory after placing an order with a supplier. Lead time is an important factor in inventory control as it can impact inventory levels, order fulfillment times, and customer satisfaction.

Q: What is the role of vendor-managed inventory (VMI) in inventory control?

A: Vendor-managed inventory (VMI) is a system in which a supplier manages a customer's inventory levels and replenishes inventory as needed. VMI is an important factor in inventory control as it can help businesses to reduce inventory holding costs and improve order fulfillment times.

Q: What is the role of cycle counting in inventory control?

A: Cycle counting is a system used in inventory control to continuously count a portion of a business's inventory on a regular basis. Cycle counting can help businesses to improve inventory accuracy, reduce errors, and streamline inventory management processes.

Q: What is the role of reverse logistics in inventory control?

A: Reverse logistics refers to the process of managing the return of goods from customers to a business. Reverse logistics is an important factor in inventory control as it can impact inventory levels, order fulfillment times, and customer satisfaction.

Q: What is the role of order batching in inventory control?

A: Order batching is a system used in inventory control to consolidate multiple customer orders into a single order for the same item. Order batching can help businesses to reduce the total number of orders that they need to process, which can improve order fulfillment times and reduce order processing costs.

Q: What is the role of inventory optimization in inventory control?

A: Inventory optimization refers to the process of determining the optimal inventory levels and order quantities to minimize inventory holding costs while ensuring that customer demand can be met. Inventory optimization is an important factor in inventory control as it helps businesses to improve inventory accuracy, reduce stockouts, and improve order fulfillment times.

Q: What is the role of ABC analysis in inventory control?

A: ABC analysis is a system used in inventory control to categorize items based on their importance, typically in terms of their value or demand. This allows businesses to prioritize their inventory management efforts and allocate resources more effectively.

Q: What is the role of forecasting in inventory control?

A: Forecasting is the process of predicting future demand for a business's products. Forecasting is an important factor in inventory control as it helps businesses to optimize inventory levels and order quantities to meet customer demand while minimizing inventory holding costs.

Q: What is the role of technology in inventory control?

A: Technology plays a critical role in inventory control, as it enables businesses to track inventory levels, automate ordering and replenishment processes, improve inventory accuracy, and optimize inventory levels. Technologies such as barcode scanning, RFID tagging, and inventory management software can help businesses to streamline inventory management processes and reduce costs.

Q: What is the role of cross-docking in inventory control?

A: Cross-docking is a system used in inventory control to move products from inbound to outbound trucks with little or no storage time in between. Cross-docking can help businesses to reduce inventory holding costs and improve order fulfillment times.