Question 1

Inventory models in which the rate of demand is constant are called

Accepted Answer

A) fixed models. 
B) deterministic models. 
C) JIT models. 
D) requirements models. 
A) fixed models. 
B) deterministic models. 
C) JIT models. 
D) requirements models. B

Question 2

For the single-period inventory model with probabilistic demand,an order quantity smaller than the median demand is recommended when

Accepted Answer

A) co u B) co > cu C) co /cu o + cu < 1 A) co u B) co > cu C) co /cu o + cu < 1 B

Question 3

What could be meant by service level? Why is a clear understanding of this term important?

Accepted Answer

Service level refers to the level of service that a company or organization is committed to providing to its customers or clients. This can include factors such as response time, resolution time, and overall quality of service. It is important to have a clear understanding of this term because it sets expectations for both the company and its customers. By clearly defining the service level, the company can ensure that it is meeting its commitments and providing a high level of service. This can lead to increased customer satisfaction, loyalty, and ultimately, business success. On the other hand, if there is a lack of clarity or understanding around service level, it can lead to misunderstandings, dissatisfaction, and potentially loss of business. Therefore, having a clear understanding of service level is crucial for both the company and its customers.

Question 4

Bank Drugs sells Jami Michelle lipstick.The Jami Michelle Company offers a 6% discount on orders of at least 500 tubes,a 10% discount on orders of at least 1,000 tubes,a 12% discount on orders of at least 1,800 tubes and a 15% discount on orders at least 2,500 tubes.
Bank sells an average of 40 tubes of Jami Michelle lipstick weekly.The normal price paid by Bank drugs is $1 per tube.If it costs Bank $30 to place an order,and Bank's annual holding cost rate is 27%,determine the optimal order policy for Bank Drugs.

Accepted Answer

The answer of Bank Drugs sells Jami Michelle lipstick.The Jami...

Question 5

If an item's per-unit backorder cost is greater than its per-unit holding cost,no intentional shortage should be planned.

Accepted Answer

A) True 
 B)False

Question 6

A gourmet food store uses a one-week periodic review system for its supply of coffee beans.There is a five-day lead time for orders,and the store will allow two stockouts per year.
a.What is the probability of a stockout associated with each replenishment decision?
b.What is the replenishment level if demand during the review and lead-time periods is normally distributed with mean 120 pounds and standard deviation 8 pounds?
c.How many pounds of beans should be ordered if there are 42 pounds of beans on hand?

Accepted Answer

a.2/52 = .0385
b.M = F1F1F1S1

Question 7

Kellam Images prints snack food bags on long rolls of plastic film.The plant operates 250 days a year.The daily production rate is 6000 bags,and the daily demand is 3500 bags.The cost to set up the design for printing is $300.The holding cost is estimated at 2 cents per bag.
a.What is the recommended production lot size?
b.If there is a five-day lead time to set up the line, what is the recommended reorder point?

Accepted Answer

a.Q* = 250

Question 8

Demand for a popular athletic shoe is nearly constant at 800 pairs per week for a regional division of a national retailer.The cost per pair is $54.It costs $72 to place an order,and annual holding costs are charged at 22% of the cost per unit.The lead time is two weeks.
a.What is the EOQ?
b.What is the reorder point?
c.What is the cycle time?
d.What is the total annual cost?

Accepted Answer

a.Q* = 710.1
b.r = 1600
c.T =

Question 9

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

Accepted Answer

A) True 
 B)False

Question 10

For the periodic review inventory model presented in the textbook,it is assumed that a special replenishment order will be placed in the event of a stockout between review points.

Accepted Answer

A) True 
 B)False

Question 11

When demand is independent,it is not related to demand for other components or items produced by the firm.

Accepted Answer

A) True 
 B)False

Question 12

The EOQ model

Accepted Answer

A) determines only how frequently to order. 
B) considers total cost. 
C) minimizes both ordering and holding costs. 
D) All of the alternatives are correct. 
A) determines only how frequently to order. 
B) considers total cost. 
C) minimizes both ordering and holding costs. 
D) All of the alternatives are correct.

Question 13

Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with mean 50 and standard deviation 5.When the store orders more tapes,the ordering cost is $42 and the orders take 4 days to arrive.Each pack of tapes costs $7.20 and there is a 24% annual holding cost for inventory.Assume the store is open 360 days a year.
a.What is the EOQ?
b.If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what reorder point should be set?
c.How much of your reorder point in part b) is safety stock?

Accepted Answer

a.Q* = 866.025
b.r =

Question 14

The Tiernan Gallery and Art Museum distributes to its visitors a printed guide to its collections.There are about 18000 visitors per year.Holding costs for the brochures are 20% and it costs $30 to place an order with the printer.The printer has offered the following discount schedule: $$\begin{array} { c c c } 
\text { Category } & \text { Order Size } & \text { Unit Cost } \
\hline 1 & 0 - 1499 & \$ 2.50 \
2 & 1500 - 2999 & \$ 2.20 \
3 & 3000 \text { and over } & \$ 1.80
\end{array}$$ How many brochures should be printed at a time?

Accepted Answer

Q*₃ = 1732.1 (raise to 3000) TC

Question 15

If the optimal production lot size decreases,average inventory increases.

Accepted Answer

A) True 
 B)False

Question 16

Periodic review inventory systems

Accepted Answer

A) are less subject to stockouts than corresponding continuous review systems. 
B) require larger safety stock levels than corresponding continuous review systems. 
C) have constant order quantities. 
D) make the coordination of orders for multiple products more difficult. 
A) are less subject to stockouts than corresponding continuous review systems. 
B) require larger safety stock levels than corresponding continuous review systems. 
C) have constant order quantities. 
D) make the coordination of orders for multiple products more difficult.

Question 17

In the single-period inventory model with probabilistic demand,

Accepted Answer

A) surplus items are not allowed to be carried in future inventory. 
B) co = cu. 
C) probabilities are used to calculate expected losses. 
D) All of the alternatives are correct. 
A) surplus items are not allowed to be carried in future inventory. 
B) co = cu. 
C) probabilities are used to calculate expected losses. 
D) All of the alternatives are correct.

Question 18

In the periodic review model,the order quantity at each review period must be sufficient to cover demand for the review period plus the demand for the following lead time.

Accepted Answer

A) True 
 B)False

Question 19

If lead time is longer than the review period,the order quantity at any review point is the amount needed for the inventory on hand plus all outstanding orders needed to reach the replenishment level.

Accepted Answer

A) True 
 B)False

Question 20

Derive and explain the total cost expression for the EOQ model.

Accepted Answer

The total cost expression for the Econom

Inventory models in which the rate of demand is constant are called

For the single-period inventory model with probabilistic demand,an order quantity smaller than the median demand is recommended when

What could be meant by service level? Why is a clear understanding of this term important?

If an item's per-unit backorder cost is greater than its per-unit holding cost,no intentional shortage should be planned.

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

For the periodic review inventory model presented in the textbook,it is assumed that a special replenishment order will be placed in the event of a stockout between review points.

When demand is independent,it is not related to demand for other components or items produced by the firm.

The EOQ model

If the optimal production lot size decreases,average inventory increases.

Periodic review inventory systems

In the single-period inventory model with probabilistic demand,

In the periodic review model,the order quantity at each review period must be sufficient to cover demand for the review period plus the demand for the following lead time.

If lead time is longer than the review period,the order quantity at any review point is the amount needed for the inventory on hand plus all outstanding orders needed to reach the replenishment level.

Derive and explain the total cost expression for the EOQ model.

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Advanced Optimization Applications

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Markov Processes

Filters

Exam 14: Inventory Models

Inventory models in which the rate of demand is constant are called

For the single-period inventory model with probabilistic demand,an order quantity smaller than the median demand is recommended when

What could be meant by service level? Why is a clear understanding of this term important?

If an item's per-unit backorder cost is greater than its per-unit holding cost,no intentional shortage should be planned.

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

For the periodic review inventory model presented in the textbook,it is assumed that a special replenishment order will be placed in the event of a stockout between review points.

When demand is independent,it is not related to demand for other components or items produced by the firm.

The EOQ model

If the optimal production lot size decreases,average inventory increases.

Periodic review inventory systems

In the single-period inventory model with probabilistic demand,

In the periodic review model,the order quantity at each review period must be sufficient to cover demand for the review period plus the demand for the following lead time.

If lead time is longer than the review period,the order quantity at any review point is the amount needed for the inventory on hand plus all outstanding orders needed to reach the replenishment level.

Derive and explain the total cost expression for the EOQ model.

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Advanced Optimization Applications

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Markov Processes

Filters