Exam 12: Managing Inventories

The decision of how many fruit baskets to make for the holiday season would be analyzed using a single-period inventory model.

You manage a candy store in a high traffic shopping mall where you have collected the following information.Answer the next four questions based on these data. Weekly demand for small candy boxes = 90 boxes Cost to place one purchase order with the box supplier = $19.80 Cost to hold one box for one year in inventory = $2.45 Lead time = 2 weeks Weeks in a year = 52 weeks a.What is the Economic Order Quantity (EOQ)? b.Assuming the EOQ is ordered, what is the average inventory level (i.e., cycle inventory)? c.Assuming the EOQ is ordered, what is the total annual order and inventory holding cost? d.If a Fixed Period System (FPS) is adopted, what is the replenishment level (M) without safety stock?

Inventory that represents partially completed products waiting further processing is called ____ inventory.

What is inventory management and why is it important?

Inventory position refers to the physical quantity of items on hand in an inventory system.

In the fixed period system, managers must make two key decisions: the time interval between reviews, and the replenishment level.

A stock-keeping unit is the same no matter at which location the item is found.

An example of stochastic demand might be: "The daily demand for milk is normally distributed with a mean of 150 gallons and a standard deviation of 15 gallons."

Stochastic demand inventory models are easier to analyze and solve than deterministic models.