Exam 5: Inventory Management

A(n)________ system is a system of inventory control in which a maximum level is marked on the storage shelf or on a measuring rod,and the inventory is brought up to the mark periodically.

Inventory is created when items,including materials,parts,or finished goods are disbursed faster than they are received.

A(n)________ is the situation that occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.

The primary reason for keeping inventories low is that inventory represents a temporary monetary investment in goods on which a firm must pay interest.

One component of the holding cost of inventory is interest.

Table 5.10 A firm using the periodic review system (P system) reviews the status of an item every 4 weeks. The standard deviation in weekly demand is 60 units. The lead time for the item is 3 weeks, whereas demand averages 200 units per week. You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.10.How much safety stock should be held to achieve a 95 percent cycle service level?

Which of the following statements regarding a continuous review (Q)system for inventory control is FALSE?

Table 5.7 Demand $= 5200$ units/year Standard deviation of weekly demand $= 11$ units Ordering costs $= \$ 45 /$ order Holding costs $= \$ 2 /$ unit/year Cycle-service level $= 90 \%$ ( z for $90 \% = 1.28$ ) Lead time $= 3$ weeks Number of weeks per year $= 52$ weeks -Use the information in Table 5.7.If a firm uses the continuous review system to control the inventory,what would be the reorder point?

Elimination of products with ________ and ________ are two ways that poorly managed inventory creates environmental waste.

________ analysis is the process of dividing items into three classes according to their dollar usage so that managers can focus on items that have the higher dollar value.

What is generally true about the class A items in ABC analysis? They represent

Table 5.9 Demand = 140 units/week Standard deviation in weekly demand $= 21$ units Ordering cost $= \$ 20$ /order Holding cost $= \$ 1$ per unit per year Cycle-service level $= 85$ percent Lead time $= 6$ weeks You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.9.Assume demand during lead time to be normally distributed.For a continuous review system,what should be the reorder point (R)?

A(n)________ is a system that allows employees to place orders when inventory visibly reaches a certain marker.

Which one of the following statements represents an advantage of a Q system over the P system?

For a given level of annual demand (D),as the lot size Q increases,inventory holding costs increase while ordering or setup costs decrease.

What are the secondary levers for cycle inventory?

What are the secondary levers for pipeline inventory?

The two-bin inventory system is a type of visual system.

One of the ways that the poorly managed inventory creates environmental waste is through products that have "best before date."

For a continuous review (Q)inventory system,with uncertain demand a company is only at risk of running out of stock over the lead time (L)required to receive an order.