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Exam 12: Inventory Management

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Question 61

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A(n)________ system triggers inventory ordering on a uniform time frequency.

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Question 62

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ABC analysis classifies inventoried items into three groups,usually based on annual units or quantities used.

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Question 63

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A specific product has demand during lead time of 100 units,with a standard deviation of 25 units.What safety stock (approximately) provides a 95% service level?

The Winfield Distributing Company has maintained an 80% service level policy for inventory of string trimmers.Mean demand during the reorder period is 170 trimmers,and the standard deviation is 60 trimmers.The annual cost of carrying one trimmer in inventory is $6.The area sales people have recently told Winfield's management that they could expect a $400 improvement in profit (based on current figures of cost per trimmer)if the service level were increased to 99%.Is it worthwhile for Winfield to make this change?

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division.Perform ABC analysis on the data.Which products do you suggest the firm keep the tightest control over? Explain.

The difference between P and Q inventory systems is

ABC analysis is based upon the principle that

Describe ABC inventory analysis in one sentence.What are some policies that may be based upon the results of an ABC analysis?

Montegut Manufacturing produces a product for which the annual demand is 10,000 units.Production averages 100 per day,while demand is 40 per day.Holding costs are $2.00 per unit per year;set-up costs $200.00.If they wish to produce this product in economic batches,what size batch should be used? What is the maximum inventory level? How many order cycles are there per year? How much does management of this good in inventory cost the firm each year?

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Which of the following statements about the basic EOQ model is true?

Work-in-process inventory is devoted to maintenance,repair,and operations.

Consider a local club selling Christmas trees.If trees cost $15 and sell for $60 with no salvage value,what is the ideal service level? If salvage value is increased to $5,what is the change in service level?

Given the following data: D = 65,000 units per year,S = $120 per setup,P = $5 per unit,and I = 25% per year,calculate the EOQ and calculate annual costs following EOQ behaviour.

________ is the time between placement and receipt of an order.

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

A production order quantity problem has daily demand rate = 10 and daily production rate = 50.The production order quantity for this problem is approximately 612 units.The average inventory for this problem is approximately

Average daily demand for a product is normally distributed with a mean of 20 units and a standard deviation of 3 units.Lead time is fixed at 25 days.What reorder point provides for a service level of 95%?

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 (round to the nearest whole tray) ? Assume doughnuts have no salvage value after the day is complete.