Exam 18: Inventory Management

The EOQ model is most relevant for which one of the following?

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level?

An inventory buffer adds value and lowers cost in all supply chains.

Given the same demand, setup/ordering costs, and carrying costs, the EPQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed.

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

If there are shipping cost economies that result from bundling orders for different items together, the __________ model becomes a relatively more attractive option.

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?

Safety stock is held because we anticipate future demand.

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

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

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?

Dairy items, fresh fruit, and newspapers are items that:

A fill rate is the percentage of _____ filled by stock on hand.

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

An operations strategy for inventory management should work toward:

A cycle count program will usually require that A items be counted:

Which of the following is not one of the assumptions of the basic EOQ model?

Which of the following is least likely to be included in order costs?

Which one of the following is implied by a lead time service level of 95 percent?

A risk avoider would want ______ safety stock.