Exam 6: Inventory Control Models

Suppose that lead-time demand is normally distributed with a mean of 100 units and a standard deviation of 20 units.If a firm wants to maintain a 97% service level,what should the reorder point be?

Consider the material structure tree for item A below.If 20 units of A are needed,how many units of D are needed?

In ABC inventory analysis,items in the "A" group should have the lowest dollar value to the firm.

With ________,inventory arrives just before it is needed.

Which of the following is not considered a significant inventory cost?

An inventory model that can handle dependent demand is called a(n)

East Valve Distributors distributes industrial valves and control devices.The Eastern control device has an annual demand of 9,375 units and sells for $100 per unit.The cost of ordering is $160 per order and the average carrying cost per unit per year is $0.75.Determine the economic order quantity.

An increase in ordering cost will increase the economic order quantity,holding all other factors constant.

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

Inventory is such an expensive asset that it may account for as much as 50 percent of a firm's invested capital.

Which of the following factors is (are)not included in carrying cost?

Fresh First grocery store purchases bread at $1 per loaf and sells it at $1.50 a loaf.Any unsold bread is fed to the geese at a local pond.What is the decision rule?

The demand during the lead-time is normally distributed with a mean of 40 and a standard deviation of 4.If the company wishes to maintain a 90 percent service level,how much safety stock should be held?

The same ratio of marginal loss to the sum of marginal loss and marginal profit is used to solve one-period inventory models for both discrete and continuous probability distributions.

R.C.Barker makes purchasing decisions for his company.One product that he buys costs $50 per unit when the order quantity is less than 500.When the quantity ordered is 500 or more,the price per unit drops to $48.The ordering cost is $30 per order and the annual demand is 7,500 units.The holding cost is 10 percent of the purchase cost.If R.C.wishes to minimize his total annual inventory costs,he must evaluate the total cost for two possible order quantities.What are these two possible quantities? (Round answer to nearest unit. )

ArtOrgan,Ltd.distributes mechanical replacements for human mitral heart valves.Its artificial valve has a demand of 12,765 units per year and sells for $7,900 per unit.The cost of ordering is $75 per order and the average carrying cost per unit per year is $150.Determine the economic order quantity.

Service level is the chance,measured in percent,that there will be a stockout.

Purinnerds Dog Food is a very popular product at Kay Gnein's corner grocery.Demand for this is relatively constant,and the total demand for the year is 1,200 bags.The cost of placing an order is $50,while the holding cost is $3 per unit per year.The store is open 300 days per year.Lead-time for this is 8 days. (a)If Kay places 50 orders per year,what would her annual ordering and holding costs be? (b)If Kay wishes to minimize her total inventory cost,how many units should she order each time an order is placed? (c)What is the reorder point?

Andre Candess manages an office supply store.One product in the store is computer paper.Andre knows that 10,000 boxes will be sold this year at a constant rate throughout the year.There are 250 working days per year and the lead-time is 3 days.The cost of placing an order is $30,while the holding cost is $15 per box per year.If Andre orders 500 boxes each time he orders from his supplier,what would his total annual inventory cost be (holding cost plus ordering cost)?

The "point at which to reorder" depends directly on which of the following?