Exam 9: Supply Chain Inventory Management

A store has collected the following information on one of its products: Demand = 4,000 units/year Ordering costs = $15/order Holding costs = $2/unit/year Lead-time = 5 days weeks Number of weeks per year = 50 weeks If a firm uses the continuous review system to control the inventory,what would be the order quantity?

Scenario 9.1 The Talbot Company uses electrical assemblies to produce an array of small appliances.One of its high cost / high volume assemblies,the XO-01,has an estimated annual demand of 8,000 units.Talbot estimates the cost to place an order is $50,and the holding cost for each assembly is $20 per year.The company operates 250 days per year. -Use the information in Scenario 9.1.How many times per year must Talbot order the XO-01 when orders are placed using the EOQ quantity?

What is generally true about the class A SKUs in ABC analysis? They represent about:

Use the following to answer the questions below. Shipments of Product X from a plant to a wholesaler are made in lots of 600.The wholesaler's average demand for X is 100 units per week.Lead time from plant to wholesaler is 4 weeks.The wholesaler pays for the shipments when they leave the plant. -Refer to the instruction above.Which of the following situations results in the wholesaler's total cycle plus pipeline inventories amounting to 400 units?

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 80 units Open orders (scheduled receipts): 100 units Backorders: 20 units What is Hess's inventory position for this item?

Considering the EOQ model,smaller lots are justified when holding costs are decreased.

Scenario 9.1 The Talbot Company uses electrical assemblies to produce an array of small appliances.One of its high cost / high volume assemblies,the XO-01,has an estimated annual demand of 8,000 units.Talbot estimates the cost to place an order is $50,and the holding cost for each assembly is $20 per year.The company operates 250 days per year. -Use the information in Scenario 9.1.What is the economic order quantity for the XO-01?

One component of the ordering cost of inventory is shrinkage.

Which one of the following statements is best?

Which one of the following statements represents an advantage of a Q system over the P system?

Inventories needed for the production of services and goods (inputs to a firm's transformation processes)are called:

Scenario 9.10 Demand = 52,000 units/year Standard deviation of weekly demand = 110 units Ordering costs = $45/order Holding costs = $0.50/unit/year Cycle-service level = 90% Lead time = 2 weeks Number of weeks per year = 52 weeks A normal distribution table is appended to this exam. -Use the information in Scenario 9.10.A firm uses the periodic review system to control the item depicted above.It reviews the item's status every three weeks (P = 3).At the most recent inventory review,an inventory clerk found 1,500 units.There were no scheduled receipts and no backorders.How many units should be ordered? (Hint: You must calculate T before answering this question. )

A continuous review system is sometimes called a fixed interval reorder system.

A(n)________ is a system of inventory control in which the inventory records are always current.

An inventory system answers two important questions: when to order and how much to order.Which of the following statements correctly explains how a Q system (continuous review system)or a P system (periodic review system)answers these questions?

The Lemming Company implements an aggressive marketing campaign and effectively doubles the annual demand for Model 13s.Their total annual holding cost should:

Scenario 9.8 Peterson Enterprises uses a continuous review inventory control system.The firm operates 50 weeks per year and has the following characteristics for an item: Demand = 50,000 units/year Ordering cost = $35/order Holding cost = $2/unit/year Lead-time = 3 weeks Standard deviation in weekly demand = 125 units A normal distribution table is appended to this exam. -Use the information in Scenario 9.8.If Peterson wishes to provide a 90% cycle-service level,what is the reorder point?

Which of the following DOES NOT generate pressure to increase inventories?

Vilas County Hospital consumed 400 boxes of bandages per week last year.The price of bandages was $80 per box,and the hospital operates 52 weeks per year.The cost of processing an order was $64,and the cost of holding one box throughout a full year was 20% of the value of the material. Last year the hospital ordered bandages,on average,once every two weeks,each time ordering 800 boxes.What extra cost did the hospital incur that could have been avoided if the EOQ concept had been applied?

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 economic order quantity for this item?