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Exam 13: Inventory Management

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Question 21

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Assuming a thirty-day month, at what point should bills be reordered?

A) 0 bills remaining
B) 417 bills remaining
C) 2,500 bills remaining
D) 10,000 bills remaining
E) 12,500 bills remaining

F) All of the above
G) A) and B)

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Question 22

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In the A-B-C classification system, items which account for sixty percent of the total dollar-volume for few inventory items would be classified as:

A) A items
B) B items
C) C items
D) A items plus B items
E) B items plus C items

F) C) and D)
G) A) and C)

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Question 23

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The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.

The A-B-C approach involves classifying inventory items by unit cost, with expensive items classified as 'A' items and low cost items classified as 'C' items.

In a two-bin inventory system, the amount contained in the second bin is equal to the:

Demand for a component averages 80 units per week, with a weekly standard deviation of demand of 14 units.The current supplier of this component offers a four-week lead time.Stockout risk is to be kept at 8%.Assume that it costs $50 to hold one unit in inventory for a year.Suppose the annual cost for the items would be $500 higher if they were purchased from another vendor, but that vendor would offer a two-week lead time.Would it be better to go with the more-expensive but more-responsive vendor?

An inventory buffer adds value and lowers cost in all supply chains.

A shop that makes candles offers a scented candle, which has a monthly demand of 360 boxes.Candles can be produced at a rate of 36 boxes per day.The shop operates 20 days a month.Assume that demand is uniform throughout the month.Setup cost is $60 for a run, and holding cost is $2 per box on a monthly basis. Determine the following: (A) the economic run size (B) the maximum inventory (C) the number of days in a run

The total cost curve is relatively flat near the EOQ.

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves:

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Assuming a thirty-day month, if she were to order 6,000 bills at a time, what would be the length of an order cycle?

A machine is expected to use approximately three spare parts during its useful life.The spares cost $200 each and have no salvage value or other use.The manager has ordered five spares.Assuming a Poisson usage rate, what range of shortage cost is implied? Ce = $200 Mean = 3 (Poisson) Cs = ? Assuming a Poisson-distributed variable with a mean of 3, if stocking 5 units is optimal, this implies that the optimal service level must be between .815 and .916 Thus,

The average inventory level and the number of orders per year are inversely related: As one increases, the other decreases.

Safety stock is held because we anticipate future demand.

The two basic issues in inventory are how much to order and when to order.

If she were to order 80 pounds of pepperoni at a time, what would be the average inventory level?

An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

What is the economic order quantity for pepperoni?

If he were to order 16 cases of Stein beer at a time, what would be the daily total inventory costs, EXCLUDING the cost of the beer?