Question 1

Vendor Managed Inventory (VMI)

Accepted Answer

An inventory management practice where the supplier is responsible for maintaining the buyer's inventory levels.

Question 2

Enterprise Resource Planning (ERP)

Accepted Answer

Software that integrates all facets of an operation, including product planning, development, manufacturing, sales, and marketing.

Question 3

FIFO

Accepted Answer

First In, First Out, an accounting and inventory valuation method.

Question 4

JIT

Accepted Answer

Just In Time, an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process.

Question 5

Core Charge

Accepted Answer

A form of deposit paid until the old part is returned.

Question 6

Parts Catalogue

Accepted Answer

A comprehensive list of parts, often with diagrams or pictures, to help identify needed parts.

Question 7

Stock Keeping Unit (SKU)

Accepted Answer

A unique identifier for each distinct product and service that can be purchased.

Question 8

OEM

Accepted Answer

Original Equipment Manufacturer, a company that produces parts and equipment that may be marketed by another manufacturer.

Question 9

Aftermarket Parts

Accepted Answer

Parts made by a company other than the original equipment manufacturer.

Question 10

Purchase Order (PO)

Accepted Answer

A commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Question 11

Bin Location System

Accepted Answer

A method for locating and storing parts in a parts department.

Question 12

Turnover Rate

Accepted Answer

The rate at which inventory is sold and replaced.

Question 13

Safety Stock

Accepted Answer

Extra inventory to prevent stockouts due to unpredictable demand.

Question 14

Lead Time

Accepted Answer

The time between the initiation and completion of a production process.

Question 15

Consignment Inventory

Accepted Answer

Inventory that is in the possession of the retailer but still owned by the supplier.

Question 16

Reorder Point

Accepted Answer

The inventory level at which a new order should be placed.

Question 17

Perpetual Inventory System

Accepted Answer

An inventory system where book inventory is adjusted continuously throughout an accounting period.

Question 18

Periodic Inventory System

Accepted Answer

An inventory system where book inventory is updated at the end of an accounting period.

Question 19

Economic Order Quantity (EOQ)

Accepted Answer

The number of units that a company should add to inventory with each order to minimize the total costs of inventory.

Question 20

Cross-Docking

Accepted Answer

A practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars.

Question 21

SKU Rationalization

Accepted Answer

The process of analyzing whether carrying a product is profitable.

Question 22

Backorder

Accepted Answer

An order for a product that cannot be filled at the current time due to a lack of available inventory.

Question 23

ABC Analysis

Accepted Answer

An inventory categorization technique that divides inventory into categories based on cost per unit and quantity held in stock.

Question 24

Dead Stock

Accepted Answer

Inventory that has not been sold or used for a long period of time.

Question 25

LIFO

Accepted Answer

Last In, First Out, an accounting and inventory valuation method.

Question 26

Cycle Counting

Accepted Answer

An inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day.

Question 27

Dropshipping

Accepted Answer

A retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.

Question 28

Service Level

Accepted Answer

A measure of the performance of a system, as seen by the customer.

Question 29

Fill Rate

Accepted Answer

The fraction of customer demand that is met through immediate stock availability, without backorders or lost sales.

Question 30

Lot Number

Accepted Answer

Identification for a particular batch of products, indicating the production specifics.

Question 31

Lot Sizing

Accepted Answer

The determination of production quantity for a particular batch or lot.

Question 32

Shrinkage

Accepted Answer

The loss of products between point of manufacture or purchase from supplier and point of sale.

Question 33

Reverse Logistics

Accepted Answer

The process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.

Question 34

Bullwhip Effect

Accepted Answer

A distribution channel phenomenon in which forecasts yield supply chain inefficiencies.

Question 35

Demand Forecasting

Accepted Answer

The process of predicting customer demand to optimize supply decisions.

Question 36

Stockout

Accepted Answer

A situation in which the demand or requirement for an item cannot be fulfilled from the current inventory.

Question 37

Surplus Inventory

Accepted Answer

Extra inventory that exceeds the projected demand for the product.

Question 38

Stock Rotation

Accepted Answer

The process of organizing inventory to use the oldest stock first to avoid spoilage or obsolescence.

Question 39

Stock Reservation

Accepted Answer

The process of setting aside a portion of stock for a specific customer or purpose.

Question 40

Demand Variability

Accepted Answer

The fluctuation in demand for a product during a certain period.

Question 41

Physical Inventory Count

Accepted Answer

The process of counting inventory items in the entire warehouse or at specific locations.

Question 42

Days of Supply

Accepted Answer

A measurement of the duration a firm can continue to operate using its existing inventory.

Question 43

Order Picking

Accepted Answer

The process of finding and extracting products from a warehouse to fulfill customer orders.

Question 44

Cross-Referencing

Accepted Answer

The practice of using alternative part numbers to locate the same part.

Question 45

Order Cycle Time

Accepted Answer

The amount of time from when a customer places an order to when they receive it.

Question 46

Overstock

Accepted Answer

Inventory that a business has but is not able to sell or use.

Question 47

Par Level

Accepted Answer

A minimum quantity of a given item that a business must keep on hand.

Question 48

Buffer Stock

Accepted Answer

Extra stock kept on hand to cushion against unexpected demand or supply interruptions.

Question 49

Decoupling Inventory

Accepted Answer

Inventory held to allow work centers to operate independently.

Question 50

Vendor Lead Time

Accepted Answer

The total time it takes for a supplier to deliver goods after the order has been placed.

Question 51

Order Quantity

Accepted Answer

The number of units ordered for inventory to meet customer demand.

Question 52

Stock Discrepancy

Accepted Answer

A difference between the actual number of inventory items and the number indicated in the inventory records.

Question 53

Holding Cost

Accepted Answer

The cost associated with storing inventory that remains unsold.

Question 54

Order Cost

Accepted Answer

The cost associated with placing an order, excluding the cost of the goods ordered.

Question 55

Transit Inventory

Accepted Answer

Inventory that is in transit from a supplier or to a customer.

Question 56

Available-to-Promise (ATP) Inventory

Accepted Answer

Uncommitted inventory in a scheduled production that can be promised to a customer.

Question 57

Anticipation Inventory

Accepted Answer

Inventory held in anticipation of customer demand.

Question 58

Fluctuation Inventory

Accepted Answer

Inventory held as a buffer against uncertainties in demand and lead time.

Question 59

Obsolete Inventory

Accepted Answer

Inventory that has reached the end of its product lifecycle and can no longer be sold or has no market demand.

Question 60

Non-Stock Inventory

Accepted Answer

Items that are typically not kept in stock, often because they are specially ordered.

Question 61

Average Inventory

Accepted Answer

The mean value of inventory within a certain time period.

Question 62

Carrying Cost

Accepted Answer

The total cost of holding inventory, including storage, insurance, and spoilage.

Question 63

Safety Lead Time

Accepted Answer

Extra lead time added to protect against variability in lead time.

Question 64

Backflushing

Accepted Answer

A method of inventory bookkeeping where the book (computer system) inventory of components is automatically reduced by the computer after production has been posted.

Red Seal Exam - Partsperson Advanced Flashcard Set