Exam 11: Inventory Management

In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $10 per unit per month, what is the economic order quantity?

Consider the disaster risk decision tree model. Using the notation from the model, what is the expected monetary value (cost) of choosing two suppliers?

A container of gaming equipment valued at $100,000, currently located in Tustin, CA, needs to be delivered to the Princeton, NJ, plant. The annual holding cost rate for this type of item has been estimated at 25%. There are five carriers available. Their delivery time and cost are listed in the table below. Which carrier is most economical?

Unfortunately, not many supply chain metrics exist that can be effectively used to evaluate performance within a company and for its supply chain partners.

A bullwhip measure value less than 1 would imply a(n) ________ scenario as orders move up the supply chain toward suppliers.

One function of inventory is to take advantage of quantity discounts.

For an auto manufacturer, the demand for automobile components would be considered as independent demand.

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 7 days, a 95% service level will require how much safety stock?

Service level is:

A(n) ________ system triggers inventory ordering on a uniform time frequency.

In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time?

The EOQ model is best suited for items whose demand is dependent on other products.

Which of the following is a requirement of Q systems?

Which of the following is NOT a potential cause of the bullwhip effect?

Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

Central University uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year. The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price. How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?

Pointe au Chien Containers, Inc., manufactures in batches, and the manufactured items are placed in stock. Specifically, the firm is questioning how best to manage a specific wooden crate for shipping live seafood, which is sold primarily by the mail/phone order marketing division of the firm. The firm has estimated that carrying cost is $3 per unit per year. In addition, annual demand = 60,000 units, and setup cost is $100. The firm currently plans to satisfy all customer demand from stock on hand. Demand is known and constant. The production rate is nearly instantaneous. (a) What is the cost minimizing size of the manufacturing batch? (b) What is the total annual holding and setup cost of this solution?

When determining storage locations in a warehouse with a single dock, the items that should be placed closest to the dock are those that have the highest:

Tommy's Family Furniture is looking for a new supplier for its armchairs. Tommy is primarily interested in only two criteria: price and name brand value. He considers the value of the name brand to be four times more important than price. Tommy has narrowed his choices to two suppliers. On a 10-point scale, he has assigned Amy's Armchairs a score of 9 on price and 4 on name brand value. He has assigned Annie's Armchairs a score of 3 on price and 6 on name brand value. Apply the factor weighting technique to help Tommy choose a new armchair supplier.

Which of the following would NOT be considered (in addition to delivery speed) when choosing a mode of transportation?