Exam 16: Inventory Management

In the basic EOQ model, as the size of the order increases, the annual ________ cost increases.

A bakery's use of corn syrup is normally distributed with a mean of 50 gallons per day and a standard deviation of 5 gallons per day. Lead time for delivery of the syrup is normal with a mean of 4 days and a standard deviation of 2 days. The manager reorders when his inventory drops to 300 gallons. What cycle service level is implied by this policy?

In an EOQ model, as the carrying cost increases, the order quantity

Given an EOQ model with shortages in which annual demand is 4200 units, C_o=$160, C_c=$7 per unit per year, and C_s=$25, what is the total annual shortage cost?

The lower the service level, the greater the probability of a stockout.

In a ________ inventory system, an order is placed for a variable amount after a fixed passage of time.

________ is the probability that the inventory available during the lead time will meet demand.

Inventory ________ costs include storage cost and the cost of capital.

The objective of the basic EOQ model is to ________.

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150. -Determine the optimal order quantity.

EOQ is the optimal order quantity that will ________ total inventory costs.

Periodic inventory systems normally require smaller safety stock than a continuous inventory system.

A firm is currently purchasing an item for inventory using the basic EOQ model. They plan on making the product themselves and will be using the EOQ model based on noninstantaneous receipt of inventory. If everything else stays the same, what changes should the firm expect?

The basic EOQ model assumes that ________ is known with certainty and is relatively constant over time.

In the basic EOQ model, if D=100 per month, C_o=$20, and C_c=$15 per unit per month, what is the EOQ?

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150. -How many order per year will they place?

A keyboard costs $1000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?

Kushie's Coffee in Bangalore is a quaint establishment nestled near MG Road in the central business district. It serves coffee and fruit cake to a clientele that has been enjoying these products for over fifty years. The demand for coffee beans is 6600 cases per year (each case has 24 ten-pound bags). It would be disastrous for them to run out of coffee, so they keep a safety stock of 30 cases. The cases cost $4800 and it costs $5 per case to order coffee. As coffee is a perishable product, the holding cost is fairly high at $40/case/year. The lead time to receive an order is seven days. Kushie's is open 300 days a year. -What is their cost for holding all types of inventory if they order optimally?

Given an EOQ model with shortages in which annual demand is 4200 units, C_o=$160, C_c=$7 per unit per year and C_s=$25, what is the annual carrying cost?

The manager of the Quick Stop Corner convenience store (which is open 360 days per year) sells four cases of Stein soda each day (1440 cases per year). Order costs are $8.00 per order. The lead time for an order is three days. Annual holding costs are equal to $57.60 per case. -If average demand for an inventory item is 200 units per day, lead time is 3 days, and safety stock is 100 units, what is the reorder point?