Question 1

Explain is a paragraph how Economic Order Size (EOQ)Model works.Go into detail and do not just include the equation.

Accepted Answer

The Economic Order Quantity (EOQ) model is a method used to determine the optimal order quantity that a company should purchase to minimize total inventory costs. The model takes into account the costs of holding inventory, ordering inventory, and the demand for the product.

The EOQ model works by balancing the costs of holding inventory and the costs of ordering inventory. Holding inventory involves costs such as storage, insurance, and obsolescence, while ordering inventory involves costs such as transportation, receiving, and inspection. The goal of the EOQ model is to find the order quantity that minimizes the total cost of these two components.

To calculate the EOQ, the model considers the annual demand for the product, the ordering cost per order, and the holding cost per unit. By using these inputs, the EOQ formula calculates the optimal order quantity that will minimize the total inventory costs.

By using the EOQ model, companies can determine the most cost-effective order quantity, which can help them reduce inventory holding costs, ordering costs, and overall inventory management expenses. This can lead to improved cash flow, reduced carrying costs, and better overall financial performance for the company. The EOQ model is a valuable tool for businesses to optimize their inventory management and improve their bottom line.

Question 2

Given the following information and the demand probability table, what is the order policy for the Q-system?
The annual demand is 1800 units.The cost of placing an order is $100 while the cost of holding a unit for a year is $12.00.The cost of stocking out is $33.00.No lead time.
 $$\begin{array} { | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Daily } \
\text { Demand }
\end{array} & 0 & 4 & 6 & 8 & 10 \
\hline \text { Probability } & 0.07 & 0.45 & 0.28 & 0.15 & 0.05 \
\hline
\end{array}$$

Accepted Answer

Lot size 175 unit with a reorder point of 8 units

Question 3

Calculate the EOQ size for the following case.What is the EOQ size and the number of orders placed per year? For your answer, round up the figures up to 0 decimal points.(size/number)
The annual demand for the item is 2580 units.It costs $500 to place an order and costs $20 per item to carry it a year without passing it to the customer.

Accepted Answer

A)  125 units/40 times 
B)  275 units/19 times 
C)  374 units/9 times 
D)  360 units/8 times 
A)  125 units/40 times 
B)  275 units/19 times 
C)  374 units/9 times 
D)  360 units/8 times D

Question 4

Choose the incorrect choice regarding the descriptions of the primary functions of inventories.
1)Pipeline inventory: inventories traveling from one location to another
2)Seasonal inventories: inventories accumulated during low sales periods and depleted during high usage periods
3)Safety stocks: inventories used to absorb random demand uncertainties

Accepted Answer

A)  (1) 
B)  (2) 
C)  (2) and (3) 
D)  None of the above 
A)  (1) 
B)  (2) 
C)  (2) and (3) 
D)  None of the above

Question 5

While the assumptions make the EOQ system easier to use, the model becomes less reflective of reality.The incorporation of safety stock relaxes the __________ assumption.The addition of back orders relaxes the __________ assumption.

Accepted Answer

A)  constant lead time/no demand uncertainty 
B)  constant lead time/no shortages allowed 
C)  no shortages allowed/no demand uncertainty 
D)  no demand uncertainty/no shortages allowed 
A)  constant lead time/no demand uncertainty 
B)  constant lead time/no shortages allowed 
C)  no shortages allowed/no demand uncertainty 
D)  no demand uncertainty/no shortages allowed

Question 6

In a Q-system, the daily demand is 850 units with a standard deviation of 12 units.The Cycle service level is 97.5%.What is the reorder point?

Accepted Answer

The answer of In a Q-system, the daily demand is...

Question 7

Select, among the following statements regarding Decoupling stocks, the correct statements.
1)inventories at major stocking points throughout the system
2)allows for each work center to begin at the same starting time
3)Used to absorb random demand uncertainties

Accepted Answer

A)  (1) 
B)  (3) 
C)  (1) and (2) 
D)  None of the above 
A)  (1) 
B)  (3) 
C)  (1) and (2) 
D)  None of the above

Question 8

The company is currently conducting an inventory review.Calculate the target inventory value (T)and the current order size for a P-system.(T/size)
The expected weekly demand is 1250 units.The standard deviation for a week is 250 units.The TBR 4 weeks and the lead time is 1 week.The cycle service level is 94%.After review, it is shown that there are 1260 units on hand.

Accepted Answer

A)  6600 units/5340 units 
B)  7120 units/5860 units 
C)  5860 units/4600 units 
D)  4600 units/3340 units 
A)  6600 units/5340 units 
B)  7120 units/5860 units 
C)  5860 units/4600 units 
D)  4600 units/3340 units

Question 9

Which of the following products is suited to a P-System?
1)Vending machine soda cans
2)Supplies for Local mom and pop grocery
3)Jewelry

Accepted Answer

A)  (1) 
B)  (1) and (2) 
C)  (2) and (3) 
D)  None of the above 
A)  (1) 
B)  (1) and (2) 
C)  (2) and (3) 
D)  None of the above

Question 10

The classic EOQ model is the simplest form which incorporates all the assumptions regarding uncertainties.Choose the cost components not included in this classic EOQ model but included in the extension models.
1)Ordering costs
2)Safety stock costs
3)Stock out costs
4)Internal storage costs

Accepted Answer

A)  (2) 
B)  (2) and (3) 
C)  (1), (2), and (3) 
D)  None of the above 
A)  (2) 
B)  (2) and (3) 
C)  (1), (2), and (3) 
D)  None of the above

Question 11

Calculate the EOQ size for the following case.What is the EOQ size and the number of orders placed per quarter? For your answer, round up the figures up to 0 decimal points.(size/number)
The average demand for the item is 540 units per quarter.It costs $150 to place an order.The item's price is $250 per unit and carrying cost ratio for the year is 20%.

Accepted Answer

A)  147 units/4 times per quarter 
B)  147 units/15 times per quarter 
C)  74 units/15 times per quarter 
D)  74 units/8 times per quarter 
A)  147 units/4 times per quarter 
B)  147 units/15 times per quarter 
C)  74 units/15 times per quarter 
D)  74 units/8 times per quarter

Question 12

By incorporating the demand uncertainty into EOQ model, the concept of service level is introduced.Service level is associated with how much safety stock to be carried.There are two types of service levels.___________ uses the probability of stocking out as a measure while _____________ uses expected number of units short per reorder cycle.Choose the correct words to fill in the blanks.

Accepted Answer

A)  Cycle service level/customer service levels 
B)  Cycle service level/order service levels 
C)  Customer service levels/cycle service level 
D)  Order service levels/cycle service level 
A)  Cycle service level/customer service levels 
B)  Cycle service level/order service levels 
C)  Customer service levels/cycle service level 
D)  Order service levels/cycle service level

Question 13

In one sentence, define what demand is during lead time.

Accepted Answer

expected demand for

Question 14

When calculating the EOQ size, describe the difference between holding cost per unit per period and the holding cost per unit per year.How would the EOQ equation need to be managed in each case?

Accepted Answer

The Economic Order Quantity (EOQ) is a f

Question 15

The company is using a lot size of 700 units per order.Calculate the safety stock required for a cycle service level of 97.5%.In addition, what is the cost difference between the current policy and using the EOQ lot size? (safety stock/cost)
The expected annual demand is 123,670 units.The standard deviation for a week is 345 units.The ordering cost is $200 and the carrying cost is $3.00 per unit per year.In addition, the lead time is 3 weeks and there are 52 weeks per year.

Accepted Answer

A)  1171 units/$24,202 
B)  8306 units/$36,384 
C)  1171 units/$24,202. 
D)  4060 units/$12,182. 
A)  1171 units/$24,202 
B)  8306 units/$36,384 
C)  1171 units/$24,202. 
D)  4060 units/$12,182.

Question 16

Choose, among the inventory systems, the system that has the least relations to the following description?
An order is placed whenever the inventory levels fall below reorder point

Accepted Answer

A)  Fixed-order quantity order point system 
B)  EOQ model 
C)  Reorder point system 
D)  Periodic review system 
A)  Fixed-order quantity order point system 
B)  EOQ model 
C)  Reorder point system 
D)  Periodic review system

Question 17

Given the demand probability table, complete the following table.
 $$\begin{array} { | c | c | c | c | c | c | } 
\hline \text { Demand } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Probability } & 0.21 & 0.17 & 0.22 & 0.25 & 0.15 \
\hline
\end{array}$$
$$\begin{array} { | c | c | c | c | } 
\hline \text { Reorder point (R) } & \text { Safety Stock (S) } & \begin{array} { c } 
\text { Demand Probability } \
\mathrm { P } ( \mathrm { d } = \mathrm { R } )
\end{array} & \begin{array} { c } 
\text { Probability of } \
\text { stocking out } \mathrm { P } ( \mathrm { d } > \mathrm { R } )
\end{array} \
\hline 0 & & & \
\hline 1 & & & \
\hline 2 & & & \
\hline 3 & & & \
\hline 4 & & & \
\hline
\end{array}$$

Accepted Answer

None

Question 18

ABC Classification uses dollar usage to classify inventory items into categories of importance.There have been attempts to extend the concept of ABC Classification to other more sophisticated measures.Explain why this mostly does not work and why ABC Classification in its simplest form does work.

Accepted Answer

BC Classification works by categorizing

Question 19

Using the E(Z)table, convert a customer service level (CSL)of 99% into a cycle service level.
The weekly demand is 525 units with a standard deviation of 167 units.The lot size is 300 units.

Accepted Answer

The answer of Using the E(Z)table, convert a customer service...

Question 20

Discuss what does differentiate the two types of quantity discount methods? (All and incremental)Go into details.

Accepted Answer

Quantity discount methods are used by bu

Explain is a paragraph how Economic Order Size (EOQ)Model works.Go into detail and do not just include the equation.

While the assumptions make the EOQ system easier to use, the model becomes less reflective of reality.The incorporation of safety stock relaxes the assumption.The addition of back orders relaxes the assumption.

In a Q-system, the daily demand is 850 units with a standard deviation of 12 units.The Cycle service level is 97.5%.What is the reorder point?

Select, among the following statements regarding Decoupling stocks, the correct statements. 1)inventories at major stocking points throughout the system 2)allows for each work center to begin at the same starting time 3)Used to absorb random demand uncertainties

Which of the following products is suited to a P-System? 1)Vending machine soda cans 2)Supplies for Local mom and pop grocery 3)Jewelry

The classic EOQ model is the simplest form which incorporates all the assumptions regarding uncertainties.Choose the cost components not included in this classic EOQ model but included in the extension models. 1)Ordering costs 2)Safety stock costs 3)Stock out costs 4)Internal storage costs

In one sentence, define what demand is during lead time.

When calculating the EOQ size, describe the difference between holding cost per unit per period and the holding cost per unit per year.How would the EOQ equation need to be managed in each case?

Choose, among the inventory systems, the system that has the least relations to the following description? An order is placed whenever the inventory levels fall below reorder point

Given the demand probability table, complete the following table. Demand 0 1 2 3 4 Probability 0.21 0.17 0.22 0.25 0.15 Reorder point (R) Safety Stock (S) Demand Probability (=) Probability of stocking out (>) 0 1 2 3 4

ABC Classification uses dollar usage to classify inventory items into categories of importance.There have been attempts to extend the concept of ABC Classification to other more sophisticated measures.Explain why this mostly does not work and why ABC Classification in its simplest form does work.

Using the E(Z)table, convert a customer service level (CSL)of 99% into a cycle service level. The weekly demand is 525 units with a standard deviation of 167 units.The lot size is 300 units.

Discuss what does differentiate the two types of quantity discount methods? (All and incremental)Go into details.

Supply chain focused manufacturing planning and control

Forecasting demand

S&OP/Aggregate planning

Master production schedule

MRP production system

JIT/Lean production

Push and pull production systems

Capacity management

Production planning and control for remanufacturing

Supply chain focused outsourcing

Manufacturing focused supply chain integration

Filters

Exam 5: Supply chain focused inventory management

Explain is a paragraph how Economic Order Size (EOQ)Model works.Go into detail and do not just include the equation.

While the assumptions make the EOQ system easier to use, the model becomes less reflective of reality.The incorporation of safety stock relaxes the __________ assumption.The addition of back orders relaxes the __________ assumption.

In a Q-system, the daily demand is 850 units with a standard deviation of 12 units.The Cycle service level is 97.5%.What is the reorder point?

Select, among the following statements regarding Decoupling stocks, the correct statements. 1)inventories at major stocking points throughout the system 2)allows for each work center to begin at the same starting time 3)Used to absorb random demand uncertainties

Which of the following products is suited to a P-System? 1)Vending machine soda cans 2)Supplies for Local mom and pop grocery 3)Jewelry

The classic EOQ model is the simplest form which incorporates all the assumptions regarding uncertainties.Choose the cost components not included in this classic EOQ model but included in the extension models. 1)Ordering costs 2)Safety stock costs 3)Stock out costs 4)Internal storage costs

In one sentence, define what demand is during lead time.

When calculating the EOQ size, describe the difference between holding cost per unit per period and the holding cost per unit per year.How would the EOQ equation need to be managed in each case?

Choose, among the inventory systems, the system that has the least relations to the following description? An order is placed whenever the inventory levels fall below reorder point

Given the demand probability table, complete the following table. Demand 0 1 2 3 4 Probability 0.21 0.17 0.22 0.25 0.15 Reorder point (R) Safety Stock (S) Demand Probability (=) Probability of stocking out (>) 0 1 2 3 4

ABC Classification uses dollar usage to classify inventory items into categories of importance.There have been attempts to extend the concept of ABC Classification to other more sophisticated measures.Explain why this mostly does not work and why ABC Classification in its simplest form does work.

Using the E(Z)table, convert a customer service level (CSL)of 99% into a cycle service level. The weekly demand is 525 units with a standard deviation of 167 units.The lot size is 300 units.

Discuss what does differentiate the two types of quantity discount methods? (All and incremental)Go into details.

Supply chain focused manufacturing planning and control

Forecasting demand

S&OP/Aggregate planning

Master production schedule

MRP production system

JIT/Lean production

Push and pull production systems

Capacity management

Production planning and control for remanufacturing

Supply chain focused outsourcing

Manufacturing focused supply chain integration

Filters

While the assumptions make the EOQ system easier to use, the model becomes less reflective of reality.The incorporation of safety stock relaxes the assumption.The addition of back orders relaxes the assumption.