Question 1

Sports Uniforms Ltd has an average annual demand for blue,medium polo shirts of 20 000 units.The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $25.
Required:
a.Use the economic-order-quantity (EOQ)model to determine the optimal order size.
b.Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.
c.Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Sports Uniforms Ltd has an average annual...

Question 2

If Freemantle Ferry Company has a safety stock of 240 units and the average daily demand is 30 units,how many days can be covered if the shipment from the supplier is delayed by 12 days?

Accepted Answer

A) 12.0 days 
B) 6.7 days 
C) 8.0 days 
D) 10.0 days

Question 3

Answer the following questions using the information below:
Appleby Incorporated is a distributor of golf balls.Kel's Golf Supplies is a local retail outlet which sells golf balls.Kel's purchases the golf balls from Appleby Incorporated at $0.75 per ball;the golf balls are shipped in cartons of 72.Appleby Incorporated pays all incoming freight,and Kel's Golf Supplies does not inspect the balls due to Appleby' reputation for high quality.Annual demand is 172 800 golf balls at a rate of 3322 balls per week.Kel's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available:
 Relevant ordering costs per purchase order$\quad\quad\quad\$ 125.00$
Carrying costs per carton per year:
Relevant insurance, materials handling,
breakage, etc,, per year$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 0.77$
-What is the economic order quantity (EOQ)?

Accepted Answer

A) 200 cartons 
B) 288 cartons 
C) 388 cartons 
D) 300 cartons

Question 4

Answer the following questions using the information below:
The Katoomba Furniture company produces a specialty dining table,and has the following information available concerning its inventory items:
 $\begin{array}{ll}
\text { Relevant ordering costs per purchase order } & \$ 250 \
\text { Relevant carrying costs per year: } & \
\text { Required annual return on investment } & 10 \% \
\text { Required other costs per year } & \$ 14.00
\end{array}$
 Annual demand is 1000 tables per year.The purchase price per table is $1600.
-How many deliveries will be required at the economic order quantity (EOQ)?

Accepted Answer

A) 5.1 deliveries 
B) 8.2 deliveries 
C) 1.0 delivery 
D) 18.5 deliveries

Question 5

An Enterprise Resource Planning (ERP)System is a single database that collects data and feeds it into software applications supporting all of a company's business activities.

Accepted Answer

A) True 
 B)False

Question 6

Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following industries is likely to have the highest cost of goods sold percentage relative to sales?

Accepted Answer

A) Drug manufacturers 
B) Computer manufacturers 
C) Retail organisations 
D) The percentage will usually depend on the success of a particular company

Question 8

The simplest version of the economic order quantity (EOQ)model incorporates only ordering costs,carrying costs and purchasing costs into the calculation.

Accepted Answer

A) True 
 B)False

Question 9

Relevant total costs in the economic-order-quantity (EOQ)decision model equal relevant ordering costs plus relevant:

Accepted Answer

A) purchasing costs. 
B) carrying costs. 
C) quality costs. 
D) stockout costs.

Question 10

Retailers generally have a high percentage of net profit to revenues.

Accepted Answer

A) True 
 B)False

Question 11

Sports Uniforms Ltd has an average annual demand for red,large polo shirts of 30 000 units.The cost of placing an order is $75 and the cost of carrying one unit in inventory for one year is $30.
Required:
a.Use the economic-order-quantity (EOQ)model to determine the optimal order size.
b.Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.
c.Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Sports Uniforms Ltd has an average annual...

Question 12

WA Ore Company mines iron ore for production into various metal products.During recent years,the company has had large fluctuations in its inventories of metal ingots.Much of the volatility of the inventory levels is due to the variability of demand by the company's largest customers.For large orders,the company has the technology to quickly shift production from one product to another.
Required:
Explain how the company can improve its inventory control system and give the advantages of whatever you recommend.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of WA Ore Company mines iron ore for...

Question 13

In inventory management a trigger point refers to the inventory level at which a reorder is generated.

Accepted Answer

A) True 
 B)False

Question 14

To determine the Economic Order Quantity,the relevant ordering costs are minimised and the relevant carrying costs are maximised.

Accepted Answer

A) True 
 B)False

Question 15

What is a supply chain,and what are the benefits of a supply chain analysis? Provide an example of these benefits.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What is a supply chain,and what are...

Question 16

What are the costs that result from the theft of inventory known as in the managing of inventory?
Variant question

Accepted Answer

A) Costs of quality 
B) Stockout costs 
C) External failure costs 
D) Shrinkage costs

Question 17

Cool Enterprises has one particular product that has an annual demand of 1000 units.Total manufacturing costs per unit total $40 and setup costs per batch are $15.Direct material ordering costs for the product total $10 per order.Currently,the carrying costs per unit are 25% of manufacturing costs.
Required:
Determine the economic manufacturing order quantity.

Accepted Answer

The answer of Cool Enterprises has one particular product that...

Question 18

The purchase-order lead time is the:

Accepted Answer

A) difference between the products ordered and the products received. 
B) difference between the times an order is placed and its delivery. 
C) discrepancies in purchase orders. 
D) time required to correct errors in the products received.

Question 19

The time from when an order is received by manufacturing until it becomes a finished good is called:

Accepted Answer

A) pass-through time. 
B) work-in-process time. 
C) manufacturing lead time. 
D) None of these answers are correct.

Question 20

The annual relevant total costs are at a minimum where relevant ordering costs of inventory and relevant carrying costs are equal.

Accepted Answer

A) True 
 B)False

Exam 17: Inventory Management, Just-In-Time and Simplified Costing Methods

If Freemantle Ferry Company has a safety stock of 240 units and the average daily demand is 30 units,how many days can be covered if the shipment from the supplier is delayed by 12 days?

An Enterprise Resource Planning (ERP)System is a single database that collects data and feeds it into software applications supporting all of a company's business activities.

Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

Which of the following industries is likely to have the highest cost of goods sold percentage relative to sales?

The simplest version of the economic order quantity (EOQ)model incorporates only ordering costs,carrying costs and purchasing costs into the calculation.

Relevant total costs in the economic-order-quantity (EOQ) decision model equal relevant ordering costs plus relevant:

Retailers generally have a high percentage of net profit to revenues.

In inventory management a trigger point refers to the inventory level at which a reorder is generated.

To determine the Economic Order Quantity,the relevant ordering costs are minimised and the relevant carrying costs are maximised.

What is a supply chain,and what are the benefits of a supply chain analysis? Provide an example of these benefits. _ _

What are the costs that result from the theft of inventory known as in the managing of inventory? Variant question

The purchase-order lead time is the:

The time from when an order is received by manufacturing until it becomes a finished good is called:

The annual relevant total costs are at a minimum where relevant ordering costs of inventory and relevant carrying costs are equal.