Exam 6: Inventory Control Models

Everett Mann's Dream Store sells waterbeds and supplies.The best-selling bed in the store has an annual demand of 400 units.The ordering cost is $40, while the holding cost is $5 per unit per year.There are 250 working days per year, and the lead-time is 6 days. (a)To minimize total cost, how many units should be ordered each time an order is placed? (b)If the holding cost per unit was $6 instead of $5, what would the optimal order quantity be?

Rolf Steps is the production manager for a local manufacturing firm.This company produces staplers and other items.The holding cost is $2 per unit per year.The cost of setting up the production line for this is $25.There are 200 working days per year.The production rate for this product is 80 per day.If the production order quantity is 200 units, what was the daily demand (rounded to the nearest whole unit)?

A company uses 2,750 per year of a certain subassembly that has a purchase cost of $450, and an annual holding cost of $500 per unit.Each order placed costs $150.The company operates 300 days per year and it has found that an order must be placed with the supplier 12 working days before it can expect to receive that order.For this subassembly, find: (a)the economic order quantity. (b)the reorder point.

Which of the following is not a potential drawback of an ERP system?

Explain the purpose of ABC analysis.

In the decoupling function, some inventory may be stored between each production process to act as a buffer.

The Handy Manufacturing Company manufactures small air conditioner compressors.The estimated demand for the year is 12,000 units.The setup cost for the production process is $200 per run, and the carrying cost is $10.00 per unit per year.The daily production rate is 100 units per day, and demand has been 50 units per day.Determine the number of units to produce in each batch.(The problem assumes 240 operating days.)

Mark Achin sells 3,600 electric motors each year.The cost of these is $200 each, and demand is constant throughout the year.The cost of placing an order is $40, while the holding cost is $20 per unit per year.There are 360 working days per year and the lead-time is 5 days.If Mark orders 200 units each time he places an order, what would his total ordering cost be for the year?

With an annual demand of 2,400 units, daily demand of 10 units, and daily production rate of 40 units, a company has determined that each production run will be for 200 units.If production starts when the inventory level is at zero, how many units would actually be in the warehouse at the end of the first day of production? (Round your answer to the nearest unit.)

Which of the following uses of inventory is used to make sure that adjacent process steps in a production line maintain pace?

Subcomponent J has a one week lead time and a gross requirement of 57 units in Week 6 to fill order 123.There are already 15 J's in stock at the beginning of the planning period and these are not needed for any other order other than 123.What should be the planned order release for J's in order to build product at the latest possible completion time?

Explain the basic difference(s)between the simple EOQ model and the production run model.

List major carrying cost factors.

Economic order quantity (EOQ)analysis has recently become practical as a consequence of high-speed computers.

In a JIT system, inventory managers can uncover bottlenecks by introducing or removing which of the following?

Extra inventory that is used to avoid stockouts is known as

One reason inventory is required is the uneven flow of resources through a company.

Which of the following statements concerning ABC analysis is false?

A person is using the normal distribution to determine the safety stock for a product.What z value would be associated with a 90 percent service level?

Which of the following uses of inventory is used to make sure that highly seasonable production is available throughout the year?