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, how many orders would she place in a 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 annual ordering cost?

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 annual ordering cost if they order at their EOQ level?

In the basic EOQ model, if D=60 per month, Co=$12, and Cc=$10 per unit per month, what is the EOQ?

Given an EOQ model with shortages in which annual demand is 4200 units, Co=$160, Cc=$7 per unit per year, and Cs=$25, what is the annual carrying cost?

A periodic inventory system

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. -Determine the annual shortage cost.

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 total policy cost (including cost of goods) if they order at the EOQ amount?

________ is inventory that is used to help protect against stockouts.

Assumptions of the EOQ model include:

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. -Determine the optimal shortage level.

A manager has just received a revised price schedule from a vendor. What order quantity should the manager use in order to minimize total costs? Annual demand is 120 units, ordering cost is $10, and annual carrying cost is $1 per unit. Quantity Unit Price 1-59 \ 15 60-99 \ 14 100 or more \ 13

-The interval labeled "D" in the diagram is

Inventory ________ costs include transportation and inspection.

If average demand for an inventory item is 200 units per day, lead time is 3 days, and safety stock is 100 units, what is the reorder point?

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 daily demand is 40 and the level time in days is 4, what is the reorder point?

The reorder point will ________ if lead time increases and demand per day remains the same.

The ________ determines when an order should be placed for a continuous review inventory system.

________ costs and ________ costs react inversely to each other in response to an increase in order size.

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 total annual inventory cost for product Y. Include the item cost in your calculations. (Assume 52 weeks of operation per year.)