Exam 18: Inventory Management

A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate over the 365 days that it is open.The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00.If the restaurant orders the economic order quantity then the time between orders (order cycle)is

Continuous inventory systems often incorporate information technology to improve the speed and accuracy of data entry and retrieval.

With the quantity discount model,the basic EOQ total cost formula is modified to include a term,PD,calculated by taking the purchase price multiplied by annual demand.

Annual demand for a product is 40,000 units.The product is used at a constant rate over the 365 days the company is open every year.The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00.If the company orders according to the economic order quantity (EOQ)formula,then ________ orders are placed annually.

Make a list of the basic steps involved in using the quantity discount model and discuss each.

Dependent demand is determined by external market conditions.

What is the discount order quantity using a purchase price of $122?

Continuous inventory systems are primarily intended for lower cost items because they are easier to use,and require fewer resources.

The _______________ classification system classifies inventory according to its dollar value to the firm.

Receiving,handling,and shipping costs are examples of

List several types of uncertainty that may contribute to higher inventory levels.

Dependent demand items are typically products for use by the final customer.

When demand is uncertain,a safety stock is often added to the expected demand during lead time to prevent a stockout.

A product's usage is normally distributed with a weekly average demand of 2,000 units and a weekly standard deviation of 125.The lead time for the product is 4 weeks.If the company would like to have a service level of 90% for this product then the reorder point is approximately

The objective of inventory management is to keep enough inventory on-hand to satisfy customer demand without regard to cost effectiveness.

Annual demand for a product is 40,000 units.The product is used at a constant rate over the 365 days the company is open every year.The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00.If the company orders according to the economic order quantity (EOQ)formula then its optimal order size for this product is

In ABC analysis,each class of inventory requires different levels of inventory monitoring and control.

What is the inventory ordering cost using the economic order quantity?

___________ demand items are used in the process of producing a final product.

The quantity discount model considers