Exam 11: Managing Inventory Throughout the Supply Chain

The flexibility of inventory increases as materials move down the supply chain.

The cashier waved the can of golden hominy across the holographic bar code reader and it emitted a piercing beep.At the same time the customer's bill was rising,the grocery store's inventory was automatically being reduced by 1 can of golden hominy down to 3 cans.This was the bare minimum amount of hominy the store manager dared carry in inventory,so the computer system automatically sent a message to the hominy man,who loaded a few cases onto his delivery truck for tomorrow morning's trip to replenish the store.This is a classic example of:

Order quantity decisions are typically made in isolation from considerations of transportation,packaging,and material handling.

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?

Define the bullwhip effect and discuss the advantages of holding inventory far upstream or downstream in the supply chain.

In a(n)________ review system,orders are placed at a constant time interval,but in a(n)________ review system,a constant order is placed at a variable time level.

In a periodic review system,if the average demand increases by 100%,the safety stock level is:

The value of goods on a "per unit" basis upstream in a supply chain is greater than the value of those same goods downstream in a supply chain.

The campus bookstore sells 4,000 sets of graduation regalia each year.Placing an order from their supplier costs $25 regardless of order quantity,so they usually place a large order (a half year's supply)at a time.It costs $5 per year to hold a cap and gown in inventory,primarily insurance costs for the highly flammable material.What is the difference in their holding cost if they order at their optimal order quantity compared to their current policy?