Exam 16: Inventory Management

The manager of the Quick Stop Corner convenience store (which is open 360 days per year) sells four cases of Stein soda each day (1440 cases per year). Order costs are $8.00 per order. The lead time for an order is three days. Annual holding costs are equal to $57.60 per case. -If the manager orders 16 cases each time she places an order, what is the average inventory level?

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. -In a noninstantaneous receipt model, daily demand is 55 units and daily production is 120 units, C_o=$70 and C_c=$4 per unit/year. The production facility operates 300 days per year. What is the optimal order quantity?

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150. -If the daily demand is 25 and the lead time in days is 4, what is the reorder point?

The EOQ model is ________ , or resistant to errors in the cost estimates and demand.

If all the variables are held constant, the total inventory cost in a noninstantaneous receipts model is ________ than the total cost in the basic EOQ model.

A bakery uses an average of 60 ounces of organic orange juice daily. Demand is normally distributed with a standard deviation of 15 ounces. The bakery places orders every seven days. The lead time for delivery of the juice is three days. -If the bakery has 190 ounces at the time an order is placed, how much should be ordered?

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150. -If the daily demand is 30 and the lead time in days is 3, what is the reorder point?

An office manager uses 400 boxes of file folders per year. The price is $8.50 per box for an order size of 199 boxes or less, $8.00 per box for orders of 200 to 799 boxes, and $7.50 per box for an order of 800 or more boxes. Carrying cost is 20 percent of the price of the product and ordering costs are $80. What order quantity minimizes total annual cost?

The ________ is the probability that the inventory available during lead time will meet demand.

The EOQ model with shortages does not allow backorders.

Shortage costs include loss of customer goodwill.

The injection molding department of Alver Inc. uses an average of 40 pounds of a special powder per day. The plant operates 250 days per year. The daily usage of the powder is normally distributed with a standard deviation of 5 pounds per day. The lead time to obtain the powder from a supplier is 9 days. The annual holding cost is $2 per unit and the cost of ordering the powder is $50. -How many orders will be placed each year?

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150. -If the daily demand is 67 and the lead time in days is 2, what is the reorder point?

A periodic inventory system has constant order sizes and order intervals.

Dana Swor's Dream Store sells weight loss products. Her best-selling item, an energy booster and fat burning pill, has an annual demand of 400 units. Ordering cost is $40 and carrying cost is $5 per unit year. How many units should she order to minimize total inventory costs?

As service level increases, expected number of stockouts ________ and safety stock ________.

The injection molding department of Alver Inc. uses an average of 40 pounds of a special powder per day. The plant operates 250 days per year. The daily usage of the powder is normally distributed with a standard deviation of 5 pounds per day. The lead time to obtain the powder from a supplier is 9 days. The annual holding cost is $2 per unit and the cost of ordering the powder is $50. -Determine the reorder point for a service level of 97%.

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 total annual shortage cost?

In the quantity discounts model, the ________ must be included in the total cost calculation. This variable is not included in the basic EOQ model.

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 economic order quantity?