Exam 11: Managing Economies of Scale in the Supply Chain: Cycle Inventory

Which of the following would not be a component of order cost?

The quantity of inventory that a stage of the supply chain either produces or purchases at a given time is

The costs considered in lot sizing decisions include material cost,fixed ordering cost,and manufacturing cost.

For commodity products where price is set by the market,manufacturers can use lot size based quantity discounts to achieve coordination in the supply chain and decrease supply chain cost.

A lot or batch size is the quantity that a stage of the supply chain either produces or purchases at a given time.

The retailer can justify the forward buying when

Discounts related to price discrimination will be lot size based.

Holding cost is the cost of carrying one unit in inventory for a specified period of time,usually one year.

All costs that do not vary with the size of the order but are incurred each time an order is placed are referred to as

Ordering costs would include which of the following?

The price paid per unit is referred to as

The primary role of cycle inventory is to allow different stages in the supply chain to

A key to reducing cycle inventory is

Cycle inventory exists in a supply chain because different stages exploit economies of scale to

Although a forward buy is often the retailer's appropriate response and increases their own profits,it usually increases demand variability with a resulting increase in inventory and flow times within the supply chain.

The goal of trade promotions is to

Pricing schedules with all unit quantity discounts encourage retailers to

If demand increases by a factor of k,the optimal lot size increases by a factor of

The fixed ordering cost is the cost of carrying one unit in inventory for a specified period of time,usually one year.

When demand is steady,cycle inventory and lot size are related as