Question 1

Suppose that the annual EOQ cost (ordering plus inventory holding)for a product stored in a warehouse is $10,000.What would the total company EOQ cost be if the firm decided to equally allocate the demand among five warehouses instead of one?

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Question 2

What is the target inventory if Frank's dairy inventory review is every 7 days and they consume an average of 15 cases of milk cartons every day? Frank's new milk carton supplier says they can deliver an order every 5 days.While Frank's material coordinator says they should order 45 cases at a time,what is their target inventory level if they do not want to maintain a safety stock?

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Question 3

When a company experiences a stockout,what are the two possibilities?

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Question 4

List some advantages of small order quantities.

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Question 5

Tom's tire shop annual demand is 1,460 tires and they are capable of producing 2,920 tires per year per shift.Tom's production manager plans to order 12 tires at a time.What is the maximum inventory level?

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Question 6

What does WIP stand for?

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Question 7

If a firm has an annual demand of 50,000 units and average transit time (in days)is 15,what is the average transportation inventory?

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Question 8

What are the three major categories of holding costs?

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Question 9

Discuss some of the factors on how much safety stock will be kept on hand.

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Question 10

What is another name for speculative inventory?

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Question 11

What is the formula for inventory turnover?

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Question 12

What inventory function protects against supply shortages?

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Question 13

What are the characteristics of a single-period inventory model?

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Question 14

Suppose that the annual cost of goods sold is $4,000,000,annual sales amount to $6,000,000,and average inventory in dollars equals $2,000,000.What is the inventory turnover?

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Question 15

What are items used in support of manufacturing and maintenance called?

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Question 16

Inventory management,order policies,storage and movement of goods,are not areas where significant gains in sustainability can be make for companies

Accepted Answer

Significant gains in sustainability can be made in inventory management, order policies, storage, and movement of goods. For example, reducing excess inventory can reduce waste and energy usage, implementing sustainable packaging and transportation options can reduce environmental impact, and optimizing warehouse layouts can improve efficiency and reduce resource usage.

Question 17

Describe advantages and disadvantages of periodic review systems.

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Question 18

What are the two methods for checking record accuracy and what do they do?

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Question 19

Risk costs are obsolescence,damage deterioration,theft,insurance and taxes.

Accepted Answer

These are all examples of costs related to risk management. Obsolescence, damage, and deterioration can lead to the loss of value in an asset, while theft and insurance are directly related to protecting against loss. Taxes may also be a factor in risk management, as certain taxes may need to be paid in the event of loss or damage to an asset.

Question 20

Define periodic review system.

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Quiz 12: Independent Demand Inventory Management