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

Answer the following questions pertaining to just-in-time inventory management: a. What are key elements of the JIT philosophy? b. What elements of the JIT approach contribute to re ducing materials inventory? c. Why doproponents of JIT believe inventory is an enemy?

Competitive pressures have led many companies to favor the JIT inventory approach.

The drum-buffer-rope system is another name for

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. What is the objective function for maximizing profits?

Olga Company has an economic order quantity for item B of 100 units. The annual demand for the product is 1,400 units, and the unit carrying cost per year is $7. What is the cost of placing an order?

Olga Company has an economic order quantity for item B of 100 units. The annual demand for the product is 1,400 units, and the unit carrying cost per year is $7. The company operates 200 days a year, the lead time for the item is ten days, and the safety stock is 100 units. What is the reorder point?

The model which expresses a constrained optimization problem as a linear objective function is called the __________ model.

The JIT approach to inventory management

Comfy Wheels Bus Company produces buses. In order to produce the seats for the buses, special equipment must be set up. The setup cost per frame is $35. The cost of carrying seats in inventory is $6 per seat per year. The company produces 90,000 buses per year. Total carrying costs (rounded to the nearest dollar) associated with the economic order quantity are

Effective inventory management conserves investment capital and facilitates response to customer demands.

The theory of constraints identifies a company's constraints and exploits them.

Firms face limited resources and limited demand for their products called constraints.

Which of the following is NOT a step in the methodology for improving performance under the theory of constraints?

The order quantity used in the EOQ model is the quantity of inventory ordered

Knoxville Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labor hours and 400 machine hours are available for production. Time requirements to produce one unit of X and Y are as follows: What is the constraint on labor hours for Knoxville Manufacturing Company?

JIT purchasing is done using

The Kanban system is an information system which ensures that parts or materials are available when needed.

Comfy Wheels Bus Company produces buses. In order to produce the seats for the buses, special equipment must be set up. The setup cost per frame is $35. The cost of carrying seats in inventory is $6 per seat per year. The company produces 90,000 buses per year. Total setup costs associated with the economic order quantity are

Effective inventory management does not consider inventory-related costs.

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure. The JIT solution is to