Ch 20 Inventory Management

According to the inventory control system matrix, if a company has highly independent products, but high transaction costs, it is likely to deploy what type inventory control process?

Manual two-bin

According to the inventory control system matrix, independent demand with high transaction costs, it is likely to deploy what type inventory control process?

Manual two-bin

Match the characteristics of the Q- and P-models based on record keeping.

Q-model-Each time a withdrawal or addition is made P-model- Only when a review is made

A fixed-order quantity system perpetually monitors the inventory level and places a new order when stock reaches some level,

R

____ _____ can be defined as the amount of inventory carried in addition to the expected demand.

Safety stock

Which of the following is a reason for keeping a supply of inventory?

To meet variation in product demand

Which of the following is not a cost associated with inventory management?

Transportation costs

Which of the following is a policy and control of an inventory system?

When stock should be replenished

The two critical components of ALL reorder point calculation scenarios are:

annual daily demand and lead time in days.

Inventory holding costs are also known as ____ costs.

carrying

Setup costs are also known as production ____ costs.

change

The purpose of classifying items into groups is to establish the appropriate degree of ____ over each item.

control

In _____, inventory is classified as in-transit, meaning that it is being moved in the system, and warehouse, which is inventory in a warehouse or distribution center.

distribution

Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand.

independent

A single period ______ model helps in situations where a company is trying to produce the optimal quantity of inventory for a single event minimizing overproduction costs and potential lost revenues.

inventory

The set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be is called a(n) ____ system.

inventory

The danger of stockout in the fixed-order quantity model occurs only during the ____ _____ .

lead time

High holding costs tend to favor ___ inventory levels and ____replenishment.

low frequent

Work-in-process is considered ____ inventory.

manufacturing

Using the probability criterion to determine safety stock is pretty simple. We assume that the demand over a period of time is normally distributed with a ____ and a ___ deviation.

mean standard

The managerial and clerical costs to prepare purchase or production orders are called:

ordering cost

If safety stock is ____, the effect is to place a reorder sooner

positive

A fixed-order_____ model uses a reorder point, R, to trigger an order of an optimum amount of product, labeled Q.

quantity or amount

Because this simple model assumes constant demand and lead time, neither _____ stock nor _____ cost is necessary.

safety stockout

Delta Company uses special equipment and personnel to changeover production runs quickly. The costs associated with this changeover approach are considered

setup cost

If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model?

single peroid

Which of the following is/are manufacturing inventory items?

-Component parts in manufacturing -Work-in-process -Finished products

A fixed-order quantity model is also called the _____

-EOQ -Q-model -economic order quantity

Carrying one standard deviation worth of safety stock gives us what probability of a stockout?

.16

Which of the following is/are components of total costs in a fixed-quantity inventory system?

Annual purchase costs Annual ordering costs Annual holding costs

Which of the following is NOT a good reason to hold inventory?

As needed to improve company cash flow

Demand is characterized as independent if it comes from sources _________ to the firm and is not related to other ___________ .

Blank 1: external, outside, or foreign Blank 2: products, parts, inventory, or items

An ____ ______ system provides the organizational structure and the operating policies for maintaining and controlling goods to be stocked.

Blank 1: inventory Blank 2: control

Total annual cost is made of of three components. Match the components with their formulas.

DC-Annual purchase price (D/Q)(S)-Annual ordering cost (Q/2)H-Annual holding cost

Which of the following is considered to be warehouse inventory?

Finished goods inventory in a distribution center

For this model, inventory for the item is monitored until it gets down to a level where the risk of stocking out is great enough that we are compelled to order.

Fixed-order quantity model

For this model, the item is ordered at certain intervals of time, for example, every Friday morning.

Fixed-time period model

The stock of any item or resource used in an organization is called?

Inventory

_____ is the stock of any item or resource used in an organization.

Inventory

____ _____ is defined as the on-hand plus on-order minus backordered quantities.

Inventory position