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Exam 12: Inventory Management

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Question 21

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List the typical components that constitute inventory holding or carrying costs.

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Typical components of inventor...

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Question 22

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Which of the following is a requirement of Q systems?

A) perpetual inventory system
B) constant order spacing
C) variable lead time
D) constant demand
E) periodic inventory system

F) C) and D)
G) B) and E)

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Question 23

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Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

What are the main reasons that an organization has inventory?

When demand is constant and lead time is variable,safety stock computation requires three inputs: the value of Z,________,and the standard deviation of lead time.

The inventory management costs for a certain product are S = $8 to order,and H = $1 to hold for a year.Annual demand is 2400 units.Consider the following ordering plans: (a)order all 2400 at one time, (b)order 600 once each quarter,and (c)order 200 once each month.Calculate the annual costs associated with each plan.Plot these values.Is there another plan,cheaper than any of these? Calculate this,and plot it (plot at least five points)on the grid below.Label your graph carefully.

In ABC analysis,"A" Items are the most tightly controlled.

ABC analysis divides on-hand inventory into three classes,generally based upon

Which of the following items is mostly likely managed using a single-period order model?

In the basic EOQ model,if D = 6000 per year,S = $100,H = $5 per unit per month,the economic order quantity is approximately

Define shrinkage.List three or more examples of shrinkage.

In an economic order quantity problem,the total annual cost curve is at its ________ where holding costs equal setup costs.

Average daily demand for a product is normally distributed with a mean of 5 units and a standard deviation of 1 unit.Lead time is fixed at four days. a.What is the reorder point if there is no safety stock? b.What is the reorder point if the service level is 80%? c.How much more safety stock is required if the service level is raised from 80% to 90%?

An inventory decision rule states "when the inventory level goes down to 14 gearboxes,100 gearboxes will be ordered." Which of the following statements is true?

A product whose EOQ is 400 experiences a 50% increase in demand.The new EOQ is

One function of inventory is to take advantage of quantity discounts.

ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

A local artisan uses supplies purchased from an overseas supplier.The owner believes the assumptions of the EOQ model are met reasonably well.Minimization of inventory costs is her objective.Relevant data,from the files of the craft firm,are annual demand (D)= 150 units,ordering cost (S)= $42 per order,and holding cost (H)= $4 per unit per year. a.How many should she order at one time? b.How many times per year will she replenish her inventory of this material? c.What will be the total annual inventory costs associated with this material? d.If she discovered that the carrying cost had been overstated,and was in reality only $1 per unit per year,what is the corrected value of EOQ?

Demand for dishwasher water pumps is 8 per day.The standard deviation of demand is 3 per day,and the order lead time is four days.The service level is 95%.What should the reorder point be?

Which of the following is not an element of inventory holding costs?