Exam 9: Inventory Management

The ________ is the measurement of an item's ability to satisfy future demand.

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.What is the annual ordering costs if Mwongola orders using the EOQ quantity?

Scenario 9.12 Demand = 100,000 units/year Number of days per year = 250 weeks Standard deviation of weekly demand = 50 units Average lead time = 5 days Standard deviation of lead time: 2 days Cycle-service level = 99% 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 safety stock should the firm use for this product?

An experienced operations manager can tell at a glance whether an item should be classified as safety stock,anticipation inventory,or cycle stock.

A(n)________ occurs when a customer order cannot be filled as promised or demanded but is filled later.

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.What is the cycle length (time between orders)when orders are placed using the EOQ quantity?

As safety stock increases,the holding cost of that inventory item ________.

Scenario 9.9 "Gollee those cats sure go through a lot of food," Geoff exclaimed as he saw the shopping list pad that had been pre-printed with the words "cat food" a the top.He pondered a different approach to shopping for the furry little darlings,reviewed his shopping records,and discovered the following.The price of cat food has held steady at 89 cents per can.Despite feigning indifference,each of the seven cats nibbles their way through an average of one can per day,three hundred sixty five days a year.The price of gasoline has held constant at $3.50 per gallon and his pickup uses a gallon each way to the cat food store.The cost to hold a can of cat food is 10% of the unit price. -Use the information in Scenario 9.9 to determine the average number of orders per year if Geoff adopts an EOQ policy.

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 ________.

The ________ is the average elapsed time between receiving replenishment orders of Q units for a particular lot size.

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.What is the economic order quantity for the Smooth Shifter?

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 What is Hess's inventory position for this item?

Considering the EOQ model,a reduction in ordering costs justifies reducing the lot size ordered.

Consider the following conditions for an item used in the Hess Company's manufacturing process: What is Hess's inventory position for this item?

A backorder occurs when a customer order cannot be filled when it is placed,but is instead filled later.

The ________ determines the frequency and quantity to order.

You have taken a job in industry and are facing your first ordering decision.As you prepare to place the order,you remember your instructor teaching you that you wouldn't use the EOQ formula if:

The manager at Crystal Mountain Ski Resort lowers the price of lift tickets to $2 during July and August,a traditionally slow period for skiing.This secondary lever impacts:

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

A stockout occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.