Get Inventory Analytics Coursera Quiz Answers
Inventory Analytics Coursera Quiz Answers
Week 1: Inventory Basics
Q1. What can a company achieve with an effective inventory management?
- Reduce cost by reducing excessive inventory and the waste associated with it
- Increase revenue by improving product variety and availability
- Speed up cash conversion cycle, and increase return on assets and asset turnover.
Q2. Why are the inventory changes of China and US highly correlated in the past 15 years?
- China, after entering WTO in 2002, has become a major supplier to the US.
- US and China are the two major economies in those years.
Q3. Why do US economic recessions highly coincide with significant and negative inventory changes
- A significant and negative inventory change means a significant shortage, and thus demand cannot be satisfied.
- A significant and negative inventory change implies a significant sales (and thus demand) decline.
Q4. To stand out in the retailing business, a company should do well simultaneously on
- Product variety
- Cash conversion cycle
Q5. For a US manufacturing firm, inventory management is important for
- Raw materials and supplies
- Half-finished products (or work-in-progress, WIP)
- Finished goods
Week 2: Inventory turns and days
Q1. What is inventory turnover (or inventory turns)?
- Annual COGS / Inventory investment
- How many times inventory is sold and replaced in a year
Q2. What is inventory days (or days of supply, DOS)?
- Number of business days in a year / inventory turns.
- Average days for which an item is held in inventory.
- The number of days of demand that you can satisfy by the inventory
Week 3: Why (or why not) hold inventory?
Q1. Why do companies hold inventory?
- To ship products over a long distance pipeline stock
- To take advantage of price discount
(offered by suppliers) – forward-buy stock
- To take advantage of the scale economy cycle stock
- To protect against uncertainty safety stock
Q2. The inventory holding cost rate (as a percentage of the product value) can be very different for different products. For example, the inventory cost rate of a computer can be much higher than that of a computer desk, why?
- The inventory holding cost rate of a computer may be much higher than that of a computer desk due to a higher obsolescence cost.
- Computers are more expensive than computer desks
Q3. What is the objective of inventory management?
- Improve product availability and reduce shortage
- Reduce excessive inventory and the waste associated with it
Q4. The CEO of Li and Fung, a Hong Kong based fashion apparel company, once said: “Inventory is the root of all evils”. Why did he say that?
- Fashion apparel products have a short life-cycle of a few months, inventory that cannot be sold in the season is worthless.
- The company designs and produces primarily for the US and EU markets and can hardly sell any left-over products in the local market.
Week 4: Managing inventory by class or type
Q1. How is managing the inventory of A items different from that of B items?
- The inventory of A items should be monitored and replenished more frequently than B items.
- It is more important for us to build a long-term relationship (via contract) with the suppliers of A items than B items.
- We should prioritize the processing of A items in the purchasing department relative to that of the B items.
Q2. Why would it be more economical to outsource the inventory of C items despite its higher acquisition cost due to the suppliers’ inventory carrying cost?
- The risk pooling effect: the supplier can pool the demand of rarely used items from different customers and effectively minimize the inventory cost.
- The supplier or a third party can build a bigger warehouse and locate in more rural areas with a lower inventory carrying cost.
Q3. What are some of the popular ways to reduce inventory in practice?
- Lead time (the time between order placement and order delivery) reduction
- Quantitative models for demand forecasting and inventory control.
- More attention to inventory management, e.g., tight management of usage rates, lead times and safety stock.
- SKU rationalization (reduction)