Exam 20: Inventory Management

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 an assumption of the basic fixed-order quantity inventory model?

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?

In a price-break model of lot sizing, the lowest cost quantity is always feasible.

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

In inventory models, high holding costs tend to favor high inventory levels.

Holding and carrying costs are different costs.

A company wants to determine its reorder point (R). Demand is variable and the company wants 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?

If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order-quantity 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?

With the fixed-order quantity model, there is no need for regular inventory monitoring.

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

Daily demand for fresh cauliflower in the ZZ-Warehouse store follows a normal distribution with a mean of 100 cartons and standard deviation of 20 cartons. The ZZ-Warehouse buys at a cost of $50.00 per carton and 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?

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?

In ABC Printing, Queen's black is a popular input with an annual demand of 50,000 gallons, ordering cost of $50 per order, and holding cost of $5 per unit per year; the economic order quantity is 1,000. Hence during the year, they used 1,000 as the order quantity. An audit of the costs revealed that the true ordering cost was only $25 and the true holding cost was $10 per gallon per year. The correct order quantity would have been 500. How much did ABC lose due to incorrect cost information during the year?

Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting backordered inventory.

Using the fixed-time-period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity?

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?