Exam 12: Inventory Control Models

Safety stock is usually held only when demand is uncertain.

If the standard deviation of demand is 10 and the desired service level is 0.90,then what is the safety stock?

Use this information to answer the following questions. A cake factory can produce cakes at the rate of 500 per day.The factory supplies its cakes to local grocery stores at a rate of 250 per day.The cost to prepare the equipment for producing the cakes is $20.Annual holding costs are $2 per cake.Assume that the factory operates 250 days a year. -Refer to the information above.What is the optimal number of yearly setups?

The optimal Economic Order Quantity (EOQ)minimizes the sum of ordering and purchasing costs.

A computer manufacturer can produce laptops at the rate of 100 per day.The manufacturer supplies its laptops to various computer retail outlets at a rate 65 per day.Set up cost for a production run is $500.Carrying cost is $125 per laptop a year.Assume the manufacturer operates 300 days a year. a.What is the optimal production run size? b.What is the minimum total annual cost for carrying and set up? c.What is the length of a production run?

Use this information to answer the following questions. A cake factory can produce cakes at the rate of 500 per day.The factory supplies its cakes to local grocery stores at a rate of 250 per day.The cost to prepare the equipment for producing the cakes is $20.Annual holding costs are $2 per cake.Assume that the factory operates 250 days a year. -Refer to the information above.What is the optimal EPQ?

Which of the following is NOT considered to be a part of carrying costs?

The C group items in ABC analysis require closer monitoring than the A group items.

A shoe store sells 90 pairs of shoes each month.Each pair carried in stock incurs a holding cost of $10 per month.Each order costs approximately $25 in shipping and receiving. a.What is the optimal EOQ? b.What is the optimal number of orders per month? c.What are the total ordering and carrying costs?

The Economic Production Quantity (EPQ)model assumes instantaneous replenishment.

Inspection of purchased goods for quality upon arrival is an example of holding cost.

Use this information to answer the following questions. A cake factory can produce cakes at the rate of 500 per day.The factory supplies its cakes to local grocery stores at a rate of 250 per day.The cost to prepare the equipment for producing the cakes is $20.Annual holding costs are $2 per cake.Assume that the factory operates 250 days a year. -Refer to the information above.What is the maximum inventory held in a given cycle?

Use this information to answer the following questions. A bakery buys sugar in 15-pound bags.The bakery uses 5000 bags of sugar each year.Carrying costs are $20 per bag per year.Ordering costs are estimated at $5 per order.Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags.It takes 5 days for each order of sugar to be filled. -Refer to the information above.What is the minimum inventory held in a given EOQ cycle?

When demand is constant,the Reorder point (ROP)is a function of demand and lead time.

Spoilage is considered to be a part of carrying cost.

Use this information to answer the following questions. A cake factory can produce cakes at the rate of 500 per day.The factory supplies its cakes to local grocery stores at a rate of 250 per day.The cost to prepare the equipment for producing the cakes is $20.Annual holding costs are $2 per cake.Assume that the factory operates 250 days a year. -Refer to the information above.What is the length of a production cycle in days?

Use this information to answer the following questions. A bakery buys sugar in 15-pound bags.The bakery uses 5000 bags of sugar each year.Carrying costs are $20 per bag per year.Ordering costs are estimated at $5 per order.Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags.It takes 5 days for each order of sugar to be filled. -Refer to the information above.What is the optimal EOQ?

Use this information to answer the following questions. A bakery buys sugar in 15-pound bags.The bakery uses 5000 bags of sugar each year.Carrying costs are $20 per bag per year.Ordering costs are estimated at $5 per order.Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags.It takes 5 days for each order of sugar to be filled. -Refer to the information above.What is the total cost of ordering and carrying sugar?

Use this information to answer the following questions. A bakery buys sugar in 15-pound bags.The bakery uses 5000 bags of sugar each year.Carrying costs are $20 per bag per year.Ordering costs are estimated at $5 per order.Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags.It takes 5 days for each order of sugar to be filled. -Refer to the information above.What is the average inventory held in a given cycle?

The optimal Economic Production Quantity (EPQ)minimizes the sum of set up and carrying costs.