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

Woodcrafters Corporation manufactures two different miniature models of furniture, a table and a chair. The company has 500 feet of lumber, 400 machine hours, and 600 direct labor hours available for production. The miniature tables and chairs provide $5 and $4 of contribution margin, respectively. The time and lumber requirements to build a miniature table or chair are as follows: a. What is the objective function being maximized? b. What are the constraint equations? c. Graph the constraint equations. Identify the feasible region. d. What is the optimal solution?

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

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

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Albuquerque Company has the following information available concerning one of its inventory items:

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

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items: -Refer to Figure 20-2. If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?

The manufacturing model which shares the same practices as a JIT manufacturing system is called manufacturing.

Albuquerque Company has the following information available concerning one of its inventory items:

Southwestern 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. If the company operates 200 days a year and the lead time for the item is five days, what is the reorder point if a safety stock of 50 units is maintained?

Albuquerque 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?

Figure 20 - 1 Moriah's Candle Company manufactures candles. The company buys wax in 45­Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year. -Refer to Figure 20-1. The lead time is 4 working days, the average rate of usage is 60 containers per day, and the company carries a safety stock of 25 containers. What is the reorder point?

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?

Figure 20 - 1 Moriah's Candle Company manufactures candles. The company buys wax in 45­Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year. -Refer to Figure 20-1. The economic order quantity (rounded) is

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

Reducing ordering and setup costs interfere with the reduction of inventory costs.

The cost of holding inventory is known as

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

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 constraint on machine hours for Montgomery Company?

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