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 length of their order cycle if they order the economic order quantity each time?

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other item held in stock.

Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.

________ inventory is the portion of total inventory that varies directly with lot size.

In an EOQ model,as the annual holding cost for an item increases,the EOQ for the item ________.

Scenario 9.12 Demand = 50,000 units/week Standard deviation of weekly demand = 15,000 units Average lead time = 8 weeks Standard deviation of lead time: 3 weeks Cycle-service level = 80% A continuous review system is used to control inventory. A normal distribution table is appended to this exam. -Use the information in Scenario 9.12.What reorder point should the firm use for this product?

The number of setups (or orders)per year is determined by the annual demand and ________.

Scenario 9.11 The Hastings Company is a nation-wide wholesaler for small electronic devices.One of its most popular items is a calculator,the "Whizz-Bang 1100".Hastings's demand,lead time and cycle service requirements for the W-B 1100 are as follows: Demand = 25,000 units/year Number of weeks per year = 50 weeks Standard deviation of weekly demand = 100 units Average lead time = 6 weeks Standard deviation of lead time: 2 weeks Cycle-service level = 85% Hastings uses a continuous review system to control inventory. A normal distribution table is appended to this exam. -Use the information in Scenario 9.11.What reorder point should Hastings use for the Whizz-Bang 1100?

Scenario 9.9 Demand = 5,200 units/year Standard deviation of weekly demand = 11 units Ordering costs = $45/order Holding costs = $2/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 3 weeks Number of weeks per year = 52 weeks -Use the information in Scenario 9.9.If a firm uses the continuous review system to control the inventory,what would be the reorder point?

________-demand items are items for which demand is influenced by market conditions and is not related to the inventory decisions for any other item held in stock.

Which one of the following statements regarding the economic order quantity (EOQ)is TRUE?

A neighborhood sportswear store sells a pair of Victoria sneakers for $40.Due to the recent fitness craze,these shoes are in high demand: 50 pairs of shoes are sold per week.The ordering cost is $20 per order,and the annual holding cost is 20% of selling price.If the store operates 52 weeks a year,what can you say about the current lot size of 235?

Scenario 9.12 Demand = 50,000 units/week Standard deviation of weekly demand = 15,000 units Average lead time = 8 weeks Standard deviation of lead time: 3 weeks Cycle-service level = 80% A continuous review system is used to control inventory. A normal distribution table is appended to this exam. -Use the information in Scenario 9.12.If the firm decides to increase its cycle-service level to 90%,what is the new reorder point if all other parameters remain the same for this product?

What are the components of holding cost?

In ABC analysis,________ SKUs represent the smallest number of SKUs but the greatest dollar usage.

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 40 units Open orders (scheduled receipts): 100 units Backorders: 60 units Reorder point: 100 units Quantity per order: 50 units Which of the following statements best describes Hess's situation regarding inventory replenishment?

________ occurs when inventory is stolen by employees and customers or when the inventory cannot be sold at full value owing to model changes or low demand.

As the annual demand increases,the EOQ also increases.

If an item is ordered using an EOQ policy,as the annual demand for an item decreases,the EOQ for the item ________.

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.If the company desires a 95% service level,how many times per year will they stock out if they order the economic order quantity each time?