Exam 13: Inventory Management

Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80.They currently have no salvage value.If the stand owner is able to find an outlet that would provide a salvage value of $0.10,what would be the increase in service level?

Which of the following statements regarding control of service inventories is TRUE?

Which of the following is an element of inventory holding costs?

What is MRO an acronym for? What is the function of MRO inventories?

What is a reorder point?

When demand is constant and lead time is variable,the safety stock computation requires three inputs: the value of Z,________,and the standard deviation of lead time.

At the economic order quantity,holding costs are equal to product costs.

Clement Bait and Tackle has been buying a chemical water conditioner for its bait (to help keep its baitfish alive)in an optimal fashion using EOQ analysis.The supplier has now offered Clement a discount of $0.50 off all units if the firm will make its purchases monthly or $1.00 off if the firm will make its purchases quarterly.Current data for the problem are: D = 720 units per year; S = $6.00,I = 20% per year; P = $25. (a)What is the EOQ at the current behavior? (b)What is the annual total cost,including product cost,of continuing their current behavior? (c)What are the annual total costs,if they accept either of the proposed discounts? (d)At the cheapest of the total costs,are carrying costs equal to ordering costs? Explain.

If daily demand is constant at 10 units per day,and lead time averages 12 days with a standard deviation of 3 days,95 percent service requires how much safety stock?

The reorder point is the inventory level at which action is taken to replenish the stocked item.

Daily demand for a product is normally distributed with a mean of 200 units and a standard deviation of 20 units.The firm currently uses a reorder point system,with a lead time of 4 days. a.What safety stock provides a 50% service level? b.What safety stock provides a 90% service level? c.What safety stock provides a 99% service level?

Demand for gallons of milk (a perishable item)is normally distributed with a weekly mean of 50 and standard deviation of 15.How many additional gallons of milk must be stocked to increase the service level from 50% to 80%?

In the quantity discount model,it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.

Cycle counting is an inventory control technique exclusively used for cyclical items.

In a safety stock problem where both demand and lead time are variable,demand averages 150 units per day with a daily standard deviation of 16,and lead time averages 5 days with a standard deviation of 1 day.What is the standard deviation of demand during lead time?

An advantage of the fixed-period inventory system is that:

Demand for ice cream at the Ouachita Dairy can be approximated by a normal distribution with a mean of 47 gallons per day and a standard deviation of 8 gallons per day.The new management desires a service level of 95%.Lead time is four days; the dairy is open seven days a week.What reorder point would be consistent with the desired service level?

Describe the difference between a fixed-quantity and a fixed-period inventory system?

The annual demand for an item is 10,000 units.The cost to process an order is $75 and the annual inventory holding cost is 20% of item cost.(a)What is the optimal order quantity,given the following price breaks for purchasing the item? (b)What price should the firm pay per unit? (c)What is the total annual cost at the optimal behavior?

In cycle counting,the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.