Exam 11: Managing Inventory Throughout the Supply Chain

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

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

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?

Supply chain inventory:

Which of the following relationships illustrates the role of dependent demand inventory?

Safety stock increases when:

A replenishment order for inventory is made when a reorder point is reached in a(n)________ inventory system.

Describe any four types of inventory and the drivers that spur their need.

The factory produces product and ships it to the distributor. The distributor sends it to the wholesaler when they receive an order. The wholesaler ships the product to the retailer as the retailer requests replenishment. The customer visits the retailer's bricks and mortar store to purchase the product when they run out. According to the bullwhip effect, which of these supply chain members is most likely subjected to the greatest variability in customer demand?

Distinguish between independent demand and dependent demand inventory and provide an example of each from the same company, same product line.

In order for the continuous review system to work, demand must be known and constant.

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

A local barbecue joint makes one massive batch of potato salad each day. If they run out of this savory side before the end of the day, their last few customers are less than satisfied, but if they make too much, they sell it to the local hog farmer for feed. Every serving costs an equivalent of $0.23 to make, but can be sold for $2.50 to customers and for $0.12 to the hog farmer. The average daily demand is for 400 servings with a standard deviation of 40 servings. How many servings should be made each day? One day the hog farmer cancels the contract - evidently there are some things that even hogs won't eat. With no fallback position, how many servings of potato salad should the barbecue joint make? Discuss the discrepancy between the two numbers.

Which of these conditions is NOT necessary for the continuous review system to be valid?

Tickets for the gala Opening Night festivities in Oklahoma City are available for $80 in advance at a couple of area businesses. If you wait until you arrive at the venue, you will pay full face value of $100 per ticket to enjoy the same festivities. If you buy a ticket and don't use it, you can buy $25 worth of chemicals and treat the ticket so that it can be used the following year. You have been taking orders from your friends for a few years and historically demand has been normally distributed with a mean of 50 tickets and a standard deviation of 10. What's the best quantity of tickets to purchase for this year's event?

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

In a single-period inventory system, as the average demand rises, the standard deviation of demand falls.

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

The excess cost of an item is the profit you would have made on it.

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 the total cost if they order at their optimal order quantity compared to their current policy?