Exam 12: Managing Inventory

In a quantity discount problem,if the savings in annual product cost is smaller than the increase in the sum of annual setup cost and annual holding cost,the discount should be ________.

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

A bakery wants to determine how many trays of doughnuts it should prepare each day.Demand is normal with a mean of 5 trays and standard deviation of 1 tray.If the owner wants a service level of at least 95%,how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete.

Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during lead time.The average daily demand is 70 units,the lead time is 4 days,and the standard deviation of demand during lead time is 15. a.How much safety stock provides a 95% service level to Thomas? b.What should the reorder point be?

Average daily demand for a product is normally distributed with a mean of 5 units and a standard deviation of 1 unit.Lead time is fixed at four days. (a)What is the reorder point if there is no safety stock? (b)What is the reorder point if the service level is 80 percent? (c)How much more safety stock is required if the service level is raised from 80 percent to 90 percent?

Montegut Manufacturing produces a product for which the annual demand is 10,000 units.Production averages 100 units per day,while demand is 40 units per day.Holding costs are $2.00 per unit per year,and setup cost is $200.00.(a)If the firm wishes to produce this product in economic batches,what size batch should be used? (b)What is the maximum inventory level? (c)How many order cycles are there per year? (d)What are the total annual holding and setup costs?

ABC analysis is based upon the principle that:

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

In the production order quantity model,the fraction of inventory that is used immediately and not stored is represented by the ratio of ________.

________ is a continuing reconciliation of inventory with inventory records.

One advantage of cycle counting is that it maintains accurate inventory records.

What is a fixed-period system?

Define service level.

The two most basic inventory questions answered by the typical inventory model are:

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

In ABC analysis,"A" items are the most tightly controlled.

All EXCEPT which of the following statements about ABC analysis are true?

Identify three techniques to control service inventories.

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units,setup cost is $50,holding cost is $12 per unit per year,the daily demand rate is 10 and the daily production rate is 100.What is the production order quantity for this problem?

Consider two inventory problems with identical demand,holding cost,and setup cost.In one,goods arrive instantly,but in the other goods arrive at a measurable rate.Which of these problems will have the larger optimal order quantity? Why?