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

Ordering costs are costs of placing and receiving an order and setup costs are the costs of getting equipment and facilities to produce products.

The reorder point in the EOQ model is

JIT avoids shutdowns due to materials shortage in all of the following ways EXCEPT

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

The traditional inventory model based on anticipated demand is called the inventory management.

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

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

The JIT approach to inventory management

The process of continuous replacement of inventory has been made easier by the use of interchanges.

The following information is available for Woodside Furniture Company, which sells two products: There are 200 hours available in the plant and 200 square feet of metal available per operating period. The constraint equation representing processing time available is

In the economic order quantity equation, the numerator under the square root includes

The theory of constraints focuses on two operational measures of system performance: inventory expenses and operating expenses.

Aeroboats Frame Corporation increased the size of several inventory order quantities that had previously been determined using the EOQ model. What is the impact on the total annual ordering costs?

If the objective is to maximize profits in a linear programming problem, the coefficients of the variables in the objective function should be the

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 objective function to maximize profits for Montgomery Company?

The goal of the theory of constraints is to make money in the future by managing constraints.

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?

Lexamoor Products Corporation produces two products. The manufacture of these products is partially automated. Total available labor hours are 400, and the total available machine hours are 600. Time requirements and contribution margins per unit for each product are as follows: a. What is the equation to be maximized? b. What are the equations that express the constraints? c. What is the greatest number of units of X that can be produced given the constraints? d. What is the optimal solution?

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

The inventory management system which represents the continuous goal of eliminating waste is called the inventory management.