Exam 13: Inventory Management

The new office supply discounter,Paper Clips,Etc.(PCE),sells a certain type of ergonomically correct office chair that costs $300.The annual holding cost rate is 40% of the item cost,annual demand is 900 units,and the ordering cost is $20 per order.The lead time is 4 days.Because demand is variable (standard deviation of daily demand is 2.4 chairs),PCE has decided to establish a customer service level of 90%.The store is open 300 days per year. a.What is the optimal order quantity? b.What is the safety stock? c.What is the reorder point?

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The EOQ model is appropriate.The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup)costs.

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division.Perform ABC analysis on the data.Which products do you suggest the firm keep the tightest control over? Explain.

Which of the following would NOT generally be a motive for a firm to hold inventories?

Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

For a certain item,the cost-minimizing order quantity obtained with the basic EOQ model is 200 units,and the total annual inventory (carrying and setup)cost is $600.What is the inventory carrying cost per unit per year for this item?

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below,the average amount of inventory on hand: Q* =

Which of the following statements about quantity discounts is FALSE?

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The cost-minimizing solution for this product is to order:

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

________ is the complement of the probability of a stockout.

What is the difference between P and Q inventory systems?

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then ________ is variable and ________ is constant.

A(n)________ system triggers inventory ordering on a uniform time frequency.

Demand for dishwasher water pumps is 8 per day.The standard deviation of demand is 3 per day,and the order lead time is four days.The service level is 95%.What should the reorder point be?

In the basic EOQ model,if D = 6000 per year,S = $100,and holding cost = $5 per unit per month,what is the economic order quantity?

The inventory management costs for a certain product are S=$8 to order,and H=$1 to hold for a year.Annual demand is 2400 units.Consider the following ordering plans: (a)order all 2400 at one time,(b)order 600 once each quarter,and (c)order 200 once each month.Calculate the annual holding and setup costs associated with each plan.(d)Is there another plan,cheaper than any of these? Calculate this order quantity along with its total annual holding and setup costs.

In the simple EOQ model,if the carrying cost were to double,the EOQ would also double.

One advantage of cycle counting is that it maintains accurate inventory records.

In the production order quantity (POQ)model,inventory does not arrive in a single moment but flows in at a steady rate,resulting in a larger production/order quantity than in an otherwise identical EOQ problem.