Exam 6: Waiting Lines

What are the components of holding cost?

Table 5.6 Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item: Demand $= 50,000$ units $/$ year Ordering cost $= \$ 35 /$ order Holding cost $= \$ 2 /$ unit $/$ year Lead time $= 3$ weeks Standard deviation in weekly demand $= 125$ units You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.6. If Peterson wishes to provide a 90 percent cycle- service level, what is the reorder point?

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

A perpetual inventory system is a system of inventory control in which the inventory records are always current.

ABC analysis is the process of dividing items into three classes according to their dollar usage.

An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system) or a P system (periodic review system) answers these questions?

Table $5.8$ Demand $= 52,000$ units/year Standard deviation of weekly demand $= 110$ units Ordering costs $= \$ 45 /$ order Holding costs $= \$ 0.50 /$ unit $/$ year Cycle- service level $= 90 \%$ Lead time $= 2$ weeks Number of weeks per year $= 52$ weeks You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.8. A firm uses the periodic review system to control the item depicted above. It reviews the item's status every three weeks (P = 3). At the most recent review an inventory clerk just checked the inventory of this item and found 1500 units. There were no scheduled receipts and no back orders. How many units should be ordered? (Hint: You must calculate T before answering this question.)

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

A(n) ______ is an item that is made to stock and normally is available when needed.

What assumptions are made in calculating the economic order quantity?

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. The firm decided to change to the periodic review system to control the item's inventory. For the most recent review, an inventory clerk checked the inventory of this item and found 500 units. There were no scheduled receipts at the time. How many units should be ordered? (HINT: Use the EOQ model to derive P, the time between reviews.)

What are the secondary levers for safety stock inventory?

Even though the economic order quantity (EOQ) is optimal only when five assumptions are satisfied, it serves as a reasonable first approximation even when these assumptions do not quite apply. Which one of the following is NOT an assumption of the EOQ?

ABC analysis is the process of dividing items into ______ according to their dollar usage.

Inventory used to increase predictable, uneven rates of demand or supply, which businesses often face, is called anticipation inventory.

______ demand items are items for which demand is influenced by market conditions and is not related to the inventory decisions for any other item held in stock.

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

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 economic order quantity (EOQ) for this item?

The item fill rate measures how quickly orders arrive from suppliers.

Pipeline inventory is a type of inventory that is usually maintained by