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Exam 12: Inventory Management

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Question 21

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When the inventory item is a spare part for a production machine,shortage cost in the single period model refers to the cost of lost production.

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Question 22

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Given the following data for a particular inventory item: -For the economic order quantity,what are average weekly holding costs?

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Question 23

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A shop owner uses a reorder point approach to restocking a certain raw material.Lead time is six days.Usage of the material during lead time is normally distributed with a mean of 42 kilograms and a standard deviation of 4 kilograms.When should the raw material be reordered if the acceptable risk of a stock-out is 3%?

Which of the following is not included in ordering cost?

In the Economic Production Quantity (EPQ)model,if usage and production/delivery rates are equal,there will be no inventory build-up,and thus the order quantity for batches or lots cannot be calculated.

Given the following data for a particular inventory item: -What is the economic order quantity for this item?

If she were to order 80 pounds of pepperoni at a time,what would be the length of an order cycle?

Lead time is exactly 20 days long.Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons.What is the standard deviation of demand during lead time?

In the EOQ model with planned shortages,if annual demand is 500,holding cost is $200,ordering cost is $15,and back-order cost is $400,the quantity back-ordered per replenishment cycle,rounded to the next whole number,is:

A firm stocks a seasonal item that it buys for $22/unit and sells for $29 unit.During the season,daily demand can be described using a Poisson distribution with a mean of 2.4.Because of the nature of the item,units remaining at the close of business each day must be removed at a cost of $2 each.What is the optimum stocking level,and what is the effective service level?

The EOQ with quantity discounts model,focuses on purchase cost and does not account for holding and ordering costs.

If order size was 1,000 kilograms of resin,what would be the length of an order cycle?

The situation when inventories are held at more than one location in a company's outbound distribution supply chain is referred to as:

A two-bin system for inventory control eliminates the need for perpetual inventory tracking.

In an A-B-C inventory system,the typical percentage of the number of types of items in inventory that represent the A classification items is about:

In the EOQ model with planned shortages,if annual demand is 500,holding cost is $200,ordering cost is $15,and back-order cost is $400,EOQ (rounded to the next whole number) is:

In fixed order-quantity inventory planning,the reorder point (ROP)can include safety stock held to account for demand variability.

In the A-B-C classification system,items which account for 70 to 80 percent of the annual dollar value (ADV) but relatively few inventory items in terms of the number of SKUs would be classified as:

Service level in a single period model is the ratio of shortage cost to the sum of shortage and excess cost.

In the basic EOQ model,the annual ordering cost is equal to: