Exam 20: Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Figure 20 - 5 The Golden Wheels Trailer Company recorded the following information for two of their trailers: There are 100 hours available in the plant and 75 square feet of vinyl available per operating period. Refer to Figure 20-5. The constraint equation representing the materials available for the production processes is

Loose constraints are best defined as

Albuquerque Company has the following information available concerning one of its inventory items: The reorder point for the inventory item is

The following information is available for Woodside Furniture Company, which sells two products: There are 200 hours available in the plant and 200 square feet of metal available per operating period. What is the objective function for maximizing sales?

Figure 20-4 Montgomery Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows: Refer to Figure 20-4. What is the objective function to maximize profits for Montgomery Company?

Iron Horses Corporation produces two types of motorcycle frames, (Frame X and Frame Y). Frame X passes through four processes: Cutting, Welding, Polishing, and Painting. Frame Y uses three of the same processes: Cutting, Welding, and Painting. Each of the four processes employs forty workers who work eight hours each day. Frame X sells for $80 per unit, and Frame Y sells for $110 per unit. Materials is the only unit-level variable expense. The materials cost for Frame X is $40 per unit, and the materials cost for Frame Y is $50 per unit. Iron Horses' accounting system has provided the following additional information about its operations and products: Iron Horses' management has determined that any production interruptions can be corrected within two days. Required:

One of the traditional reasons for holding inventory is to avoid shutdowns due to unavailability of materials. The JIT solution is to

A marker or card that specifies the quantity that the preceding process should manufacture is a

The focus on the goal of making money now and in the future by managing constraints is called the __________ .

The costs of holding inventory are called __________ costs.

JIT is a manufacturing approach focused on present demand rather than anticipated demand.

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases. The JIT solution is to

The ordering of small, frequent orders

One of the traditional reasons for holding finished goods inventories is to ensure a firm's ability to meet delivery dates. The JIT solution is to

The cost of preparing equipment and facilities so they can be used to produce a particular product or component is known as

A marker or card that specifies the quantity that a subsequent process should take from a preceding process is a

Which of the following is NOT a cost readily identified with inventory management?

JIT avoids shutdowns due to materials shortage in all of the following ways EXCEPT

The major binding constraint in an organization is defined as the drummer, which sets the production rate for the whole plant.

Magnitude Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows: What is the constraint on machine hours for Magnitude Company?