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

Figure 20 - 1 Jan's Candle Company manufactures candles.The company buys wax in 100-pound containers that cost $15 each.The company uses 20,000 containers per year, and usage occurs evenly throughout the year.The average cost to carry a 100-pound container in inventory per year is $2, and the cost to place an order is $10.The company works 250 days per year. - Refer to Figure 20-1.The lead time is four working days, the average rate of usage is 80 containers per day, and the company carries a safety stock of 20 containers.What is the reorder point?

The cost of holding inventory is known as

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

A drummer is(are)

Which of the following elements could be determined by using the economic order quantity formula?

Big 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 $40.The cost of carrying seats in inventory is $5 per seat per year.The company produces 100,000 buses per year. Total setup costs associated with the economic order quantity are

The economic order quantity is the order quantity that results in

Burley Company has the following information available concerning one of its inventory items: -If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?

Waterhouse Company decreased the size of inventory order quantities that had previously been determined using the EOQ model.If demand remains the same, what is the impact on the number of orders made during the year?

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

The shadow price

Safety stock is

A withdrawal Kanban specifies

American Supply Company has an economic order quantity for item A of 200 units.The annual demand for the product is 5,000 units, and the cost of placing an order is $8.The carrying cost per unit is

Waterhouse Company decreased the size of inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

In the graphic method of solving a linear programming problem, which of the following is depicted on the graph?

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: -What is the objective function for maximizing profits?

Answer the following questions pertaining to just-in-time inventory management: