Exam 12: Inventory Management

One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If order size was 1,000 kilograms of resin, what would be the length of an order cycle?

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the average inventory level?

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of

When to order can be calculated by the ROP and expressed as a quantity.

DVD recorders would be an example of independent-demand items.

Safety stock is held because we anticipate future demand.

Interest, insurance, and opportunity costs are all associated with holding costs.

In a single-period model, if shortage cost is four times excess cost, then the optimum service level is _____ percent.

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: when to order and how much to order.

With an A-B-C system, an item that had a high demand but a low annual dollar volume would probably be classified as

The fixed-order-interval model requires a continuous monitoring of inventory levels.

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. At what point should she reorder pepperoni?

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer. What is the economic order quantity for Stein beer?

Reorder point models are primarily used for dependent-demand items.

Dairy items, fresh fruit, and newspapers are items that

Which of these products would be most apt to involve the use of a single-period model?

Which one of the following is implied by an annual service level of 95 percent?

The perpetual inventory system is also known as what type of review system?

A single-period model would be used mainly by organizations going out of business.