Question 1

_________ is an ordering policy that orders exactly as much as is required to replenish what has been used.

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The answer of _________ is an ordering policy that orders...

Question 2

The _________ model recommends a specific (recurring) order quantity that minimizes the sum of holding cost and ordering cost.

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The answer of The _________ model recommends a specific (recurring)...

Question 3

The continuous review model signals when it's time to reorder by setting a(n) _________ in terms of the inventory position.

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The answer of The continuous review model signals when it's...

Question 4

Technologies such as _________ are being employed to track and trace inventory and allow for more accurate processing.

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The answer of Technologies such as _________ are being employed...

Question 5

Identify and briefly describe the three types of inventory.

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Question 6

Describe the three most commonly used inventory performance measures.

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Question 7

Identify the major categories and list the direct and indirect components of inventory holding costs.

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Question 8

Describe the ABC classification system. What are some inventory policies that can be based on the results of an ABC analysis?

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The answer of Describe the ABC classification system. What are...

Question 9

In a well-constructed paragraph or two, discuss the basic economic order quantity model. What are the assumptions of the EOQ model?

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The answer of In a well-constructed paragraph or two, discuss...

Question 10

Identify and discuss two recent trends in inventory management.

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Question 11

Lead time for one of Bookworld Publishing's fastest-moving textbooks in the college bookstore is nine days. Demand during this period averages 50 textbooks per day. What would be an appropriate reorder point for your college's bookstore?

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The answer of Lead time for one of Bookworld Publishing's...

Question 12

OU812 produces donuts for which the annual demand is 100,000 units. Holding costs are $0.05 per unit per day, and the setup costs are $200. If they wish to produce the donuts following an EOQ model, what lot size should be used? What is the average inventory level? How many production cycles are there per year? How much does following this EOQ policy cost the firm each year?

Accepted Answer

The answer of OU812 produces donuts for which the annual...

Question 13

Tip Top Tailoring Company has compiled the following data on the small set of products that comprise its specialty clothing division. Perform an ABC analysis on the data. Which products do you suggest the firm keep the tightest control over? Explain.
 $$\begin{array} { | c | c | c | } 
\hline \text { SKU } & \text { Annual Demand } & \text { Unit Cost } \
\hline \text { A11 } & 1,200 & \$ 350 \
\hline \text { B22 } & 100 & \$ 80 \
\hline \text { C33 } & 4,500 & \$ 50 \
\hline \text { D44 } & 400 & \$ 160 \
\hline \text { E55 } & 35 & \$ 75 \
\hline \text { F66 } & 250 & \$ 70 \
\hline \text { G77 } & 1,000 & \$ 125 \
\hline \text { H88 } & 500 & \$ 25 \
\hline \text { I99 } & 200 & \$ 60 \
\hline
\end{array}$$

Accepted Answer

The answer of Tip Top Tailoring Company has compiled the...

Question 14

Big Ike Wheels stocks high-demand cycle rims that have a normally distributed demand during the reorder period. The average daily demand is 75 rims. If the lead time is 4 days and the standard deviation of demand during the reorder period is 15, what is
A) the amount of safety stock needed to provide a 95 percent service level to their customers
B) the reorder point

Accepted Answer

The answer of Big Ike Wheels stocks high-demand cycle rims...

Question 15

The new medical supply discounter, Life Alert Inc., provides a certain type of titanium stent which costs $5,000. The annual holding cost rate is 25 percent, annual demand is 600, and the order cost is $200 per order. The lead time is 3 days. Because demand is variable (the patients may not always be ready for surgery), Life Alert has decided to establish a customer service level of 95 percent. The distributor is open 300 days per year.
A) What is the optimal order quantity?
B) What is the safety stock?
C) What is the reorder point?

Accepted Answer

The answer of The new medical supply discounter, Life Alert...

Question 16

Daily demand for a product is normally distributed with a mean of 1,200 units and a standard deviation of 120 units. The firm currently uses a reorder point system with a lead time of 8 days.
A) What safety stock provides a 49 percent service level?
B) What safety stock provides a 98 percent service level?
C) Does doubling the service level double the amount of safety stock required? Does it double the ROP?

Accepted Answer

The answer of Daily demand for a product is normally...

Question 17

Comfort Stayz Inns orders miniature shampoos for guest bathrooms on a periodic basis. Based on convenience, it decides to review its stockroom inventory of these shampoos every four weeks. The shampoo supplier takes nine days to supply an order. The hotel observes that the average daily demand for the shampoos is 50 per day, with a standard deviation of 6 shampoos. It wishes to maintain an average CSL of 95 percent for this product. What is the TIP?

Accepted Answer

The answer of Comfort Stayz Inns orders miniature shampoos for...

Question 18

Kim's Nail Salon orders nail polish and various other supplies for which the holding costs are $5 per unit per year, the ordering costs are $120 per order, and sales are relatively constant at 300 per month. What is the optimal order quantity? What is the average inventory? How many times per month should Kim order? What are her annual inventory management costs?

Accepted Answer

The answer of Kim's Nail Salon orders nail polish and...

Quiz 8: Managing Inventory