Exam 19: Special Inventory Models

Scenario C.3 Consider an item with the following discrete demand distribution for a one-period inventory decision. This item experiences a seasonal demand pattern.A profit of $15 per unit is made if the item is sold in season,but a loss of $10 per unit is incurred if sold after the season is over. -Use the information in Scenario C.3.What is the order quantity with the highest expected payoff?

The need for one-time inventory decisions also can arise in manufacturing plants when ________ items are made to a single order and ________ are high.

A newsstand is trying to determine how many bundles of newspapers to stock.For each bundle,the newsstand makes $20.However,they lose $5 per bundle if they do not sell.The following discrete probability distribution has been estimated for their daily demand.How many bundles should they stock?

Use of the the single-period model will maximize profit in every season.

Consider a manufacturer that uses the economic production lot size (ELS)model.What must the relationship be between production rate and demand rate for the producer to realize a maximum inventory that is exactly two-thirds of their lot size?

The one-period inventory model is commonly known as the newsboy problem.

Scenario C.1 Jerry Allison is in charge of production for a small producer of plumbing supplies.The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day.The company produces (and sells)the cricket 300 days per year.Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. -Use the information in Scenario C.1.If Jerry chooses to produce batches dictated by the economic production lot size (ELS)model,how many days elapse between the start of consecutive production runs (what is the time between runs or TBO)?

A(n)________ is the minimum quantity needed to receive a discount.

In an economic production lot size situation,the production rate is always ________ than the demand rate.

Briefly explain why the economic production lot size (ELS)is actually larger than the EOQ when there are noninstantaneous replenishments.

In a single period model,if purchase quantity Q exceeds demand rate D,then the number of units sold after the season is ________.

Walter White must satisfy an annual demand of 50,000 pounds per year.The setup cost for each batch is $6500 and once the setup is complete,the product may be produced at the rate of 1800 pounds per day.There is a holding cost of $15 per unit per year and the plant operates on a 350-day production year.How big should the production batch be and how long (in days)will it take to produce the batch?

Consider a manufacturer that uses the economic production lot size (ELS)model.What must the relationship be between production rate and demand rate for the producer to spend exactly the same time in the production and demand portion of the inventory cycle as in the demand only portion of the inventory cycle?

Which of these statements about the one-period model is best?

In a single period model,if the in-season demand is unexpectedly high,then the profit can be calculated as ________.

Scenario C.1 Jerry Allison is in charge of production for a small producer of plumbing supplies.The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day.The company produces (and sells)the cricket 300 days per year.Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. -Use the information in Scenario C.1.What is the economic production lot size (ELS)?

Scenario C.1 Jerry Allison is in charge of production for a small producer of plumbing supplies.The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day.The company produces (and sells)the cricket 300 days per year.Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. -Use the information in Scenario C.1.How many production runs per year are needed if Jerry chooses to produce at his economic production lot size (ELS)?

Why are there discontinuities (areas where the curve jumps up or down and is not smooth)in the total cost curve in the quantity discount model?

A pencil supplier just introduced quantity discounts.The price schedule follows. XYZ store's annual demand remains at 500 units and ordering cost at $10 per order.If annual holding cost is 10 percent of the pencils' per-unit price,what order quantity should XYZ select to minimize all costs?

The economic production lot size represents the maximum quantity of on-hand inventory for a manufacturer.