Exam 5: Inventory Management

________ is the lot size that minimizes total annual inventory holding and ordering costs.

Which one of the following statements is best?

A(n)________ system is a visual system in which an item's inventory is stored at two different locations.

________ inventory is the portion of total inventory that varies directly with lot size.

The degree at which all the work can be done is referred to as repeatability.

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.Design a continuous review system making Q equal to EOQ.What will be the economic order quantity (EOQ)?

Which one of the following descriptions of a base-stock system is best?

Jan Tuttle is the inventory manager of an art supply store.She uses a periodic review system for all oil paints.The number of periods between orders (P)for red #69 is 15 workdays.(The store operates 50 weeks/year,5 workdays/week.)Additional information concerning red #69 follows. Demand = 30 units/workday Standard deviation of daily demand = 4 units/workday Lead time = 7 workdays Desired cycle-service level = 85% A normal table is appended to this exam.What is the target inventory level T for red #69?

Explain the meaning and significance of the cycle-service level in managing inventory.

Which one of the following statements is best?

Sensitivity analysis on the economic order quantity (EOQ)formula can help the operations manager answer several questions on how to manage inventories.Which one of the following questions is NOT answered by EOQ sensitivity analysis?

Table 5.4 A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.4.What is the reorder point if the company finally decides to have a 95 percent cycle-service level?

An assistant manager is reviewing the costs associated with the store's best-selling product.The data available follows: Demand = 2000 units/year Order cost = $80/order Holding cost = $10/unit/year a.The current order quantity is 125 units per order.What is the total annual ordering cost and holding cost for this order size? b.What would be the EOQ and its associated ordering and holding cost?

________ is the cost of preparing a purchase order for a supplier or a production order for the shop.

Safety stock is only used in continuous review (Q)inventory systems,not in periodic review (P)inventory systems.

Your firm uses a continuous review system (Q system),where the inventory position is updated after every transaction.The firm operates 52 weeks per year.One of the items has the following characteristics: Demand = 14,560 units per year Ordering cost = $40 per order Holding cost = $6 per unit per year Lead time = 2 weeks Standard deviation in weekly demand = 100 units Cycle-service level = 80 percent If Q is made equal to the EOQ,what are the desired values for Q and R?

Holding inventory towards the finished goods level supports lower costs but also results in longer delivery times.