Exam 11: Managing Inventory Throughout the Supply Chain

Which of the following relationships shows dependent demand inventory?

Dependent demand inventory never needs to hold hedge inventory.

Buying advance tickets for the Giraffe Massacre concert on New Year's Eve saves the buyer one-tenth of one percent on the face value of the tickets.It would be wise to buy tickets well in advance of the concert date.

The mismatch between timing of customer demand and supply chain lead times is what drives the need for:

Tata Motors assembles cars from their own parts and subassemblies and also controls the mining and fabrication of the materials used to create those parts.When Anand ordered his luxury sedan with the platinum dashboard he knew he wouldn't be taking delivery of his dream car the next week.Rather,he would be waiting a while thanks to:

Nothing is too good for my cats,so all their food is custom made at Catastic,who operates a specialty organic food mill in an adjacent state.We need 500 pounds of food per year,distributed evenly throughout the year.It costs $20 shipping and handling to place and receive an order for this delicious food.The cats are fed only on week days,so the 500 pounds per year translates to 2 pounds per day (we go out to restaurants on the weekends).Of course,my cats don't always eat exactly 2 pounds per day,their demand could more precisely be described as an average of 2 pounds and a standard deviation of 0.3 pounds per day.It takes ten days on average to receive an order for food once I place it.It costs $35 to hold a pound of food in inventory for a year and the food costs $850 per pound.It's expensive,yes,but again,nothing is too good for my cats. What amount should I order and when should I order it if I want only a 1% chance of running out of food for my cats?

Extra inventory that is held to protect against uncertainties in either demand or lead time is called ________.

In order to find the lowest cost ordering policy in a quantity discount model,you must compare the holding cost,ordering cost,and the price per unit for various order quantities.

Inventory items with demand levels that are beyond an organization's complete control are termed ________.

Describe any four types of inventory and the drivers that spur their need.

Cycle stock can occur at more than one point in a supply chain.

The campus bookstore sells 4,000 sets of graduation regalia each year.Placing an order from their supplier costs $25 regardless of order quantity,so they usually place a large order (a half year's supply)at a time.It costs $5 per year to hold a cap and gown in inventory,primarily insurance costs for the highly flammable material.What is the difference in their holding cost if they order at their optimal order quantity compared to their current policy?

The excess cost of an item is the profit you would have made on it.

The campus bookstore sells 4,000 sets of graduation regalia each year.Placing an order from their supplier costs $25 regardless of order quantity,so they usually place a large order (a half year's supply)at a time.It costs $5 per year to hold a cap and gown in inventory,primarily insurance costs for the highly flammable material.What is their optimal order quantity?

The food engineers at Moria Foods have developed a new variety of banana they have named the "mayfly banana" which holds perfect ripeness for exactly one day before becoming a black-skinned sack of putrid mush.Which of these actions will result in a lower order quantity from the many retail establishments clamoring to stock up on this new foodstuff?

Cavalier Enterprises elects to hold no safety stock.Their service level is therefore ________.

The campus bookstore sells 4,000 sets of graduation regalia each year.Placing an order from their supplier costs $25 regardless of order quantity,so they usually place a large order (a half year's supply)at a time.It costs $5 per year to hold a cap and gown in inventory,primarily insurance costs for the highly flammable material.What is the difference in the total cost if they order at their optimal order quantity compared to their current policy?

A replenishment order for inventory is made when a predetermined stock level is reached in a(n)________ inventory system.

A local barbecue joint makes one massive batch of potato salad each day.If they run out of this savory side before the end of the day,their last few customers are less than satisfied,but if they make too much,they sell it to the local hog farmer for feed.Every serving costs an equivalent of $0.23 to make,but can be sold for $2.50 to customers and for $0.12 to the hog farmer.The average daily demand is for 400 servings with a standard deviation of 40 servings.How many servings should be made each day?

A catfish bait manufacturer uses a secret blend of ingredients to make their infamous bait.One of these ingredients,we'll call it X for proprietary reasons,is the major component in the mixture.X is ordered in 55 gallon barrels from out of state and is used at the rate of 800 barrels per year.Each order that is placed with the supplier costs $45 to process.Storage space is at a premium on the manufacturing floor and out in the yard,so their annual cost to hold inventory is $80 per barrel.The owner's brother-in-law provides transportation services and his record has been less than stellar,so lead time has averaged 6 days with a standard deviation of 3 days.Stopping the process would be disastrous,so the plant manager has set a 99% service level on the reorder point. What is the best order quantity? What is the total cost at this reorder point? What is the reorder point? What is the cost of holding this safety stock?