Exam 9: Supply Chain Inventory Management

Scenario 9.7 You are the operations manager of a firm that uses the continuous-review inventory control system.Suppose the firm operates 52 weeks a year,365 days,and has the following characteristics for its primary item: Demand = 25,000 units/year Ordering cost = $30/order Holding cost = $8/unit/year Lead time = 2 weeks Standard deviation in weekly demand = 100 units A normal distribution table is appended to this exam. -Use the information in Scenario 9.7.What is the annual cost of holding safety stock for this item if they use a 90% service level?

________ are inventories needed for the production of goods and services;they are considered the inputs to the transformation process.

Use the following to answer the questions below. Shipments of Product A from a distribution center to a retailer are made in lots of 350.The retailer's average demand for A is 75 units per week.Lead time from distributor to retailer is 3 weeks.The retailer pays for the shipments when they leave the distributor.The distributor has agreed to reduce the lead time to 2 weeks if the retailer will purchase quantities of 400 per shipment instead of 350. -Refer to the instruction above.With the change in lead times,the pipeline inventory will:

Inventory manager George Costanza knows too well that shrinkage occurs so he goes to the stock room every day to do a spot check of a few pre-selected items,physically counting them to verify that his count agrees with the number indicated by their computerized inventory system.This method of inventory control is known as ________.

An assistant manager is reviewing the costs associated with the store's best-selling product.The data available follows. Demand = 500 units/year Order cost = $40/order Holding cost = $7/unit/year a.What is the EOQ and its associated ordering and holding costs? b.If annual demand doubles and all other costs remain the same,what is the new EOQ and total annual cost?

Repeatability is an undesirable feature of some orders because they must be repeated until the order is filled correctly.

Scenario 9.3 Tom Bergman,owner and operator of the Earplug Superstore,is reviewing the costs associated with the store's best-selling hearing aid,the BZ15.The data available to Mr.Bergman concerning this device follow. Demand = 25 units/week Order cost = $3/order Holding cos = $1.50/unit/year The Earplug Superstore operates 52 weeks a year. -Use the information in Scenario 9.3.If Tom decides to order at the economic order quantity,what is the sum of the annual ordering cost and holding cost?

Compare and contrast the Q and P systems of inventory control.

What are the types of inventory from the perspective of how it is created? Where is each type most likely to exist in the supply chain?

Inventory ________ cost is the variable cost of keeping items on hand,including interest,storage and handling,taxes,insurance,and shrinkage.

Scenario 9.6 A company operating under a continuous review system has an average demand of 50 units per week for the item it produces.The standard deviation in weekly demand is 20 units.The lead-time for the item is six weeks,and it costs the company $30 to process each order.The holding cost for each unit is $10 per year.The company operates 52 weeks per year.A normal distribution table is appended to this exam. -Use the information in Scenario 9.6.What is the desired safety stock level if the company has a policy of maintaining a 90% cycle-service level?

Scenario 9.5 Cranium,Inc. ,purchases term papers from an overseas supplier under a continuous review system.The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day.It costs $60 to process each order and there is a five-day lead-time.The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level.Cranium operates 200 days per year.A normal distribution table is appended to this exam. -Use the information in Scenario 9.5.What is the EOQ for these papers?

The EOQ is the smallest lot size that a supplier will allow a customer to order.

Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.

Scenario 9.5 Cranium,Inc. ,purchases term papers from an overseas supplier under a continuous review system.The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day.It costs $60 to process each order and there is a five-day lead-time.The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level.Cranium operates 200 days per year.A normal distribution table is appended to this exam. -Use the information in Scenario 9.5.If lead-time increases by three days,what is the reorder point needed to maintain a 98% service level?

In an ABC analysis,the class _____ SKUs,which typically make up about ________ % of the SKUs,account for only about 15% of the dollar usage.