Exam 9: Inventory Management

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

What is generally TRUE about class C SKUs in ABC analysis? They represent about:

Which of the following does NOT generate pressure to decrease inventories?

Scenario 9.10 The Dolly Llama Farm keeps an average of 50 of those funny creatures on hand and each consumes a pound of grain a day,365 days per year.Grain costs $12 for a 50 pound bag and it costs the farm $10 to make a run to the feed store to pick up an order,regardless of order size.It takes the feed store four days to acquire,mix,and bag the special blend of grains necessary to make the feed the Dolly Llama Farm prefers.Storage costs for the feed runs 15% of the unit cost as the cost of money,loss due to critters,and spoilage all add up. -Refer to Scenario 9.10.What should the reorder point be if demand and lead time are invariant and the farm desires a 90% service level?

Scenario 9.2 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.The lead time from the plant to the wholesaler is 4 weeks.The wholesaler pays for the shipments when they leave the plant. -Refer to Scenario 9.2.What is the total of the wholesaler's current cycle plus pipeline inventories?

Scenario 9.7 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 9.7.If lead-time increases by three days,what is the reorder point needed to maintain a 98% service level?

Scenario 9.4 The Mwongola Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes.One of these gear assemblies,the "Smooth Shifter",is used for the two most expensive of Burdell's four models,and has an estimated annual demand of 300 units.Burdell estimates the cost to place an order is $40,and the holding cost for each assembly is $60 per year.The company operates 250 days per year. -Use the information in Scenario 9.4.The purchasing manager decides that,in order to save purchasing time,orders for the Smooth Shifter will be placed once a month,or twelve times per year.How much does this approach cost Mwongola in additional annual holding and ordering costs (instead of Mwongola ordering using the EOQ quantity)?