1. A stock out occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.
2. A backorder occurs when a customer order cannot be filled when it is placed, but is instead filled later.
3. Setup cost is independent of order size.
4. Reducing setup costs will increase the pressure to keep larger inventories.
5. Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.
6. A quantity discount is attractive because there is a drop in the price per unit when the order is sufficiently large.
7. Repeatability is an undesirable feature of some orders because they must be repeated until the order is filled correctly.
8. The primary lever to reduce anticipation inventory is to place orders closer to the time when they must be received.
9. Forward placement is a reduction in inventory and safety stock because of the merging of variable demands from customers.
10. Inventory turnover is obtained by dividing the average aggregate inventory value by sales per week at cost