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Exam 9: Inventory Management Fundamentals and Independent Demand

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Question 31

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Use the information below to answer the following question(s) : The materials manager for a billiard ball maker must periodically place orders for resin,one of the raw materials used in producing billiard balls.She knows that manufacturing uses resin at a rate of 50 kilograms each day,and that it costs $.04 per day to carry a kilogram of resin in inventory.She also knows that the order costs for resin are $100 per order,and that the lead time for delivery is four (4) days.Assume 365 days in a year. -What is the economic order quantity (EOQ) for resin?

A) 50 kilograms
B) 100 kilograms
C) 200 kilograms
D) 500 kilograms

E) None of the above
F) B) and C)

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Question 32

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Inventory which is managed by the supplier but is housed by the buyer is known as ________.

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Question 33

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Inventory that has been received and is in the production phase is known as phased in inventory.

Best Home Cabinets orders wood,their main raw material,from their supplier once every week.The inventory model they are using is known as a ________ model.

Best Tools turns over inventory once every month and its annual cost of goods sold is $180 million.The amount of average inventory they carry is ________.

Vendor-managed inventory is always consignment inventory.

Inventory turnover is

Compute the reorder point when daily demand is 25 units,orders are placed every 15 days,the lead time is 10 days,the desired service level is 98% (which corresponds to 2.06 standard deviations from the mean) ,50 units are on hand and the standard deviation of daily demand during the uncertainty period is 10 units.

Manufacturers of seasonal demand products who manufacture the product throughout the year,so as to build up an inventory buffer to be used during the high demand season are using a technique called

Stock that is owned by the supplier but is in the physical possession of the buyer is known as ________.

Which one of the following is not an assumption of the basic EOQ model?

A store of goods and stocks for some future use is known as ________.

The period between placing and receiving an order is known as ________.

The periodic review inventory model requires a continuous monitoring of inventory levels.

Walmart Stores sell the popular Tide detergent brand supplied by Procter and Gamble (P&G) .In this case P&G owns and also manages the inventory;however,the inventory is housed in Walmart Stores.Such an arrangement is called

Compute the required safety stock when weekly demand is 100 units,lead time is 2 weeks,the desired service level is 98% (which corresponds to 2.06 standard deviations from the mean) and the standard deviation of demand during lead time is 30 units.

The probability that an item will be available in stock for order fulfillment when it is needed is known as ________.

Building up inventory in anticipation of unforeseen global supply chain interruptions is known as ________.

In the EOQ quantity discount model,the optimum order quantity will always be found on the lowest total cost curve.

In the EOQ inventory model,ordering cost is always equal to carrying cost at the EOQ.