Exam 16: Inventory Management

A ________ occurs when customer demand cannot be met and the sale is lost because of insufficient inventory.

In the basic EOQ model, if lead time increases from 5 to 10 days, the EOQ will

The daily sales of a peanut butter at Power's Grocery are normally distributed, with a mean of 12 jars and a standard deviation of 4. The manager checks the inventories on shelves and places an order every three days. Delivery lead time is two days. -How much safety stock of peanut butter should they have for a 99% service level?

The purpose of inventory management is to determine how much and when to order.

A company produces item Y, and uses the basic EOQ model for managing its inventory. Lead time to obtain item Y is two weeks. Demand is normally distributed with a mean of 400 units per week and a standard deviation of 40 units per week. The desired service level is 98.5%. The ordering cost is $20, and carrying cost is 20% of the items cost, which is $10. -Determine the annual setup cost and the annual carrying cost for product Y for the economic order quantity. (Assume 52 weeks of operation per year.)

Given an EOQ model with shortages in which annual demand is 4200 units, C_o=$160, C_c=$7 per unit per year and C_s=$25, what is the optimal order quantity?

Kushie's Coffee in Bangalore is a quaint establishment nestled near MG Road in the central business district. It serves coffee and fruit cake to a clientele that has been enjoying these products for over fifty years. The demand for coffee beans is 6600 cases per year (each case has 24 ten-pound bags). It would be disastrous for them to run out of coffee, so they keep a safety stock of 30 cases. The cases cost $4800 and it costs $5 per case to order coffee. As coffee is a perishable product, the holding cost is fairly high at $40/case/year. The lead time to receive an order is seven days. Kushie's is open 300 days a year. -What is their reorder point if they order at twice their EOQ?

-The slope of the line labeled "C" in the diagram is

The daily demand for a product is normally distributed with a mean of 80 and a standard deviation of 8. Constant lead time is 4 days. The cost of placing an order is $20. The item costs $8 and the carrying rate per year is 10% of the item cost. Determine the reorder point to satisfy 90% of the orders.

The purpose of inventory management is to determine

Kushie's Coffee in Bangalore is a quaint establishment nestled near MG Road in the central business district. It serves coffee and fruit cake to a clientele that has been enjoying these products for over fifty years. The demand for coffee beans is 6600 cases per year (each case has 24 ten-pound bags). It would be disastrous for them to run out of coffee, so they keep a safety stock of 30 cases. The cases cost $4800 and it costs $5 per case to order coffee. As coffee is a perishable product, the holding cost is fairly high at $40/case/year. The lead time to receive an order is seven days. Kushie's is open 300 days a year. -What is the optimal order quantity for Kushie's Coffee?

In a noninstantaneous receipt model, daily demand is 55 units and daily production is 120 units, Co=$70 and Cc=$4 per unit per year. What is the maximum inventory level? (Assume that the facility is open 365 days per year.)

For the ________ inventory system, Q, the quantity ordered, can vary.

If lead time and demand are constant, safety stock is equal to demand multiplied by lead time.

What service level results in zero safety stock in reorder point calculations?

A company produces item Y, and uses the basic EOQ model for managing its inventory. Lead time to obtain item Y is two weeks. Demand is normally distributed with a mean of 400 units per week and a standard deviation of 40 units per week. The desired service level is 98.5%. The ordering cost is $20, and carrying cost is 20% of the items cost, which is $10. -Determine the reorder point for product Y.

Independent demand items are used internally to produce a final product.

________ demand items are final products demanded by an external customer.

In the basic EOQ model, if D=80 per month, C_o=$13, and C_c=$11 per unit per month, what is the EOQ?

A product has an annual demand of 3600 units. Unit cost for this product is $3. Set up cost is $20 and the inventory carrying rate as a percent of the unit cost is 25%. The product is produced in-house where the daily production rate is 50 units. Assume 360 working days per year. Determine the annual ordering cost and carrying cost if the optimal production quantity is made each time.