Exam 20: Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

The traditional inventory model based on anticipated demand is called the __________ inventory management.

The major binding constraint in an organization is defined as the drummer, which sets the production rate for the whole plant.

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure. The JIT solution is to

Effective inventory management conserves investment capital and facilitates response to customer demands.

The theory of constraints focuses on two operational measures of system performance: inventory expenses and operating expenses.

A linear programming problem has an objective function of 8X + 10Y. If the optimal solution provided by the model is to produce and sell 350 units of X and 1,000 units of Y, the expected return is:

The Kanban system is an information system which ensures that parts or materials are available when needed.

The goal of the theory of constraints is to make money in the future by managing constraints.

Commonwealth Dry Cleaners has 400 hours a week available to use in dry cleaning or laundry. Four thousand inches of hanging space is available. The average item that is dry cleaned takes six inches of hanging space, whereas laundry items take up only three inches of hanging space. The contribution margin for laundry items averages $3.50; dry cleaned items average $6.50. Fifty items can be washed per hour, whereas only twenty can be dry cleaned. Required: a.Determine the objective function. Is it a minimization or maximization function? b.Set up the constraint equations.

Hasselblad Company manufactures two different products, X and Y. The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: Froduct Product Y Contribution margin per unit \ 5 \ 6 Materials per unit (lbs.) 2 3 Direct labor hours per unit 5 3 What is the equation for the constraint on materials?

In the graphic method of solving a linear programming problem, which of the following is depicted on the graph?

Which of the following indicates the amount by which contribution margin will increase for one additional unit of scarce resource?

Knoxville Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labor hours and 400 machine hours are available for production. Time requirements to produce one unit of X and Y are as follows: Froduct Product Y Labor hours per unit 1 2 Machine hours per unit 5 1 What is the constraint on labor hours for Knoxville Manufacturing Company?

Effective inventory management does not consider inventory-related costs.

JIT inventory management offers alternative solutions that require higher inventories.

The major binding constraint is defined as the:

Throughput is the rate at which an organization generates money through sales.

The cost of preparing equipment and facilities so they can be used to produce a particular product or component is known as

The system that ensures that parts or materials are available when needed is called the __________ system.

Which of the following is NOT considered a carrying cost?