Exam 5: Inventory Management

The net quantity of an item available to satisfy future demand is referred to as

Sark Incorporated is out of stock for a key item,which has a backorder of 200 units.An open order of 750 units is scheduled for arrival on the following Monday.What is the current inventory position at Sark?

The secondary levers for decoupling inventory emphasize

Which one of the following statements concerning the economic order quantity (EOQ)model is TRUE?

Table 5.4 A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.4.What is the economic order quantity (EOQ)for this item?

The EOQ is the lot size that minimizes total annual inventory holding and ordering costs.

Table 5.11 The following information has been collected on an independent demand item: Demand $= 30$ units per week (assume 52 weeks/ year) Ordering and setup cost $= \$ 50$ per order Holding cost $= \$ 8$ per unit per year Lead time $= 1$ week Standard deviation in weekly demand $= 8$ units Cycle-service level $= 90 \%$ You will need to refer to a normal table to answer the question(s). -Use the information from Table 5.11.Design a continuous review system (Q system)for this item,making Q equal to the EOQ.Assume that the demand during lead time is normally distributed.What are the desired values for Q and R?

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

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

ABC analysis is the process of dividing items into ________ according to their dollar usage.

When using ABC analysis,class C items should be reviewed frequently.

Table 5.8 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 You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.8.What is the EOQ for this item?

Explain the impact the following three changes would have for EOQ level; (i)increase in the annual demand,(ii)increasing setup costs,and (iii)increases in the holding costs.

One component of the ordering cost of inventory is shrinkage.

The desired probability of not running out of stock in any one order cycle is referred to as the

What is a base-stock system?

Table 5.8 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 You will need to refer to a normal table to answer the question(s). -Use the information in Table 5.8.If the firm changed to a continuous review system,what would be the reorder point?

Table 5.2 Consider the following data for an independent demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop: Weekly demand = 50 units Ordering cost = $8/order Holding cost = $4/order Weeks in a year = 50 -Use the information in Table 5.2.If Crittenden uses the EOQ model,how frequently must she place orders for this item?

________ inventory is the inventory moving from point to point in the materials flow system.

Which one of the following statements regarding the economic order quantity (EOQ)is TRUE?