Exam 13: Inventory Management

A certain type of computer costs $1,000,and the annual holding cost is 25% of the value of the item.Annual demand is 10,000 units,and the order cost is $150 per order.What is the approximate economic order quantity?

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order.The revised EOQ is:

One function of inventory is to take advantage of quantity discounts.

Consider a local club selling Christmas trees.If trees cost $15 and sell for $60 with no salvage value,what is the ideal service level? If salvage value is increased to $5,what is the change in service level?

When quantity discounts are allowed,the cost-minimizing order quantity:

ABC analysis divides on-hand inventory into three classes,generally based upon which of the following?

Identify the typical cost components that constitute ordering costs in inventory systems.

In the basic EOQ model,if the cost of placing an order doubles,and all other values remain constant,the EOQ will:

________ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

Identify three techniques to control service inventories.

Montegut Manufacturing produces a product for which the annual demand is 10,000 units.Production averages 100 units per day,while demand is 40 units per day.Holding costs are $2.00 per unit per year,and setup cost is $200.00.(a)If the firm wishes to produce this product in economic batches,what size batch should be used? (b)What is the maximum inventory level? (c)How many order cycles are there per year? (d)What are the total annual holding and setup costs?

In the simple EOQ model,if annual demand were to increase,the EOQ would increase proportionately.

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units,setup cost is $50,holding cost is $12 per unit per year,the daily demand rate is 10 and the daily production rate is 100.What is the production order quantity for this problem?

Define shrinkage.Identify three or more examples of shrinkage.

Demand for a product is approximately normal,averaging 5 units per day with a standard deviation of 1 unit per day.Lead time for this product is approximately normal,averaging 10 days with a standard deviation of 3 days.What reorder point provides a service level of 90 percent?

Service level is:

What is cycle counting?

Holding costs are $35 per unit per year,the ordering cost is $120 per order,and sales are relatively constant at 300 per month.(a)What is the optimal order quantity? (b)What are the annual holding and setup costs?

What is the primary purpose of the basic economic order quantity model shown below? Q* =

Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during lead time.The average daily demand is 70 units,the lead time is 4 days,and the standard deviation of demand during lead time is 15. a.How much safety stock provides a 95% service level to Thomas? b.What should the reorder point be?