Exam 12: Managing Inventory Throughout the Supply Chain

Cavalier Enterprises elects to hold no safety stock.Their service level is therefore ________.

A law firm always orders 50 cases of paper from their office supply company.They incur an annual holding cost of $15 per case and have an ordering cost of $25 each time they place an order.If their annual demand is 480 cases,how much could they save annually by switching to their economic order quantity?

A manufacturer replenishes their packaging materials according to the economic order quantity model.They use 25,000 cases of packaging materials per year and order 500 cases at a time.Their cost to carry a case in inventory for a year is $12.How much does it cost them to place an order with their supplier?

Buying advance tickets for the Giraffe Massacre concert on New Year's Eve saves the buyer one-tenth of one percent on the face value of the tickets.It would be wise to buy tickets well in advance of the concert date.

Extra inventory that is held to protect against uncertainties in either demand or lead time is called ________.

A university orders all office supplies,including red grading pens,out of a catalog from the same supplier.Conservative estimates of the demand for these red pens are 12,000 pens per year.There is a $25 charge for placing an order and the university has a $10 annual cost for holding these pens.Prices for the pens are based on the quantity purchased,so if less than 100 are ordered,the unit price is $2.50,if 100 to 299 are ordered,the unit price is $2.40,if 300 to 499 are ordered,the unit price is $2.30,and if 500 or more are ordered,the unit price is $2.20.What order quantity will result in the lowest total annual cost to the university?

The mismatch between timing of customer demand and supply chain lead times is what drives the need for:

Decreases in the standard deviation of demand reduce the amount of safety stock that should be held.

A small refrigeration shop stocks up on electric motors from a catalog supplier located in the Midwest.The price of the motors varies depending on the quantity purchased;the price breaks are shown in the table.The refrigeration shop knows it will need around 600 motors for the coming season and that it will cost them about $40 to place an order.Storage cost for the motors is $10 each.In previous years they have bought all 600 at once and they are considering doing this again.What order quantity would you advise and how much can they save using your recommendation instead of their one order per year strategy?

Dependent demand inventory never needs hedge inventory.

The beef jerky driver shows up every Monday to take orders from his convenience store customers.One fine Monday morning he stops in the Quik-E Mart and notes that there are only three sticks on the shelves.Consulting his route sheet,he discovers that the restock level is 40.The order quantity is therefore:

Gordon went to the grocery store and bought a bag of carrots.He needed only three for his cottage pie recipe,but they came twelve to a bag so he diced three and tossed the rest in the crisper compartment of his stainless steel refrigerator.As he screamed his insults at his children they reminded themselves that he wasn't upset with them,rather he was concerned about the high level of ________ stock he was holding.

Which of these conditions is likely to cause a decrease in the probability of a stockout?

Inventory that is "in the pipeline" is: