Exam 11: Inventory Management

Fixed-order quantity inventory models are "time triggered."

A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired z value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R?

Inventory levels of dependent demand items are usually managed by calculations using calculus-driven, cost-minimizing models.

Fixed-time period inventory models are "event triggered."

Using the fixed-time period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a z of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity?

Using the fixed-time period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity?

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (C_u) is $0.90 and the loss resulting from that unit if it is not sold (C_o) is $0.50, which of the following is the probability of the last unit being sold?

One of the drivers of the direct-to-store (direct distribution) approach is the upstream migration of value-added logistics services.

To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R?

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.

Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.

A company is planning for its financing needs and uses the basic fixed-order quantity inventory model. Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000, setup cost of $32, a holding cost per unit per year of $4, an EOQ of 400 units, and a cost per unit of inventory of $150?

Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.

Which of the following is not one of the categories of manufacturing inventory?

In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price.

Daily demand for fresh cauliflower in the ZZ-Warehouse store follows normal distribution with mean 100 cartons and s.d. 20 cartons. The ZZ-Warehouse buys at a cost of $50.00 per carton, sells it for $70.00 per carton. Unsold cartons are sold for $20.00 per carton. What is the optimal order quantity, using the single period model?

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a z value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

Which of the following is not included as an inventory holding cost?

Demand for organic super fresh lettuce in a local super market is 5 with probability 0.2; 6 with probability 0.3; 7 with probability 0.4 or 8 with probability 0.1. Unsold lettuce are given to a food bank with a salvage value of $1.00 per lettuce. Cost of the lettuce is $3:00 per unit. Selling price is $6:00 per unit. Using single period model, what is the optimal order quantity in number of units of lettuce the super market should use?