Supply Chain Final-quiz questions

EOQ can be used when ordering costs and holding costs are highly variable. T/F?

False

Effective consumer response requires demand management but not supply management. T/F

False It requires

The longer the cycle time the smaller the cycle inventory, T/F?

False-the cycle inventory is directly proportional to the cycle time

One of the disadvantages of location pooling is lower service levels. T/F

False. Correct pooling potentially allows for higher service levels. While the total inventory decreases the inventory at the fewer locations allows for higher service levels.

Demand pooling is effective when the demand is highly correlated. T/F

False. When demand is correlated there is little benefit from pooling

Offering a very large variety of similar products makes the job of demand forecasting easier. T/F

False. Forecasting demand gets progressively more complex as the number of products increase, even if they are similar

As the amount of inventory increases the customer service level typically: -goes down -remains unchanged -goes up

Goes up

Which of the following is not inventory? -Items in a customer's shopping cart -Raw materials -Milk in a store fridge -Items being shipped

Items in a customer's shopping cart

One of the major challenges in sustainability reporting is

Lack of common resources

What are two tangible effects of sustainability efforts that motivate companies to pursue sustainability?

Reduction in costs and increase in revenue

If the demand variation (std deviation of demand) in multiple independent locations is the same, then the std. deviation of demand of a single pooled location will be equal to:

The product of the square root of the number of locations and the demand variation of a single location

In a continuous review system when demand and lead time are constant and certain, the reorder point is:

equal to the demand over the lead time

A hurricane is forcasted for the Gulf coast. In anticipation people are stocking up on plywood and essential groceries. As a result stores are stocking out of these products This is an example of:

shortage gaming

Having a flexible capacity allows you to better manage

supply with uncertain demand

Achieving service excellence requires:

understanding how the customer defines service

Customers are expecting

-ever higher levels of performance -continuous reduction in costs -greater customization of products

What makes a block chain immutable?

-requires control of at least 50% of the computers on the network to make the ledgers equivalent -changes in a block requires re-computation of all blocks that are following

If you were trying to make a decision to consolidate the demand forecast by aggregating the demand data from two locations. What would you want the correlation coefficient of the demand data between the locations to be?

.01 (lowest positive value because you want as little correlation between the demand data)

The average daily demand for a product is 25 and the lead time is 4 weeks. The standard deviation of demand each week is constant at 4.For a 95% service level calculate The safety stock is

13.2

Target stores carries over 100,000 SKUs (stock keeping units). How many SKUs likely account for the bulk of the inventory value?

20,000 -20% of 100,000 because it asks for class A items

The demand over lead time is normally distributed with a mean of 90. The reorder point for a 95% service level is 119. What is the standard deviation of demand over the lead time

17.6 (or 18)

The annual demand for a product is 2000 units. The order quantity is 200 and the holding costs are $10/unit/year. If the annual costs are $1200, what is the ordering cost per order?

20

The annual demand for sand used during the winter months for the city of Boulder is 750000 pounds. The holding cost is $0.1 per lb per year and the ordering costs at $65 per order. Currently all the sand is stored in one location in the north end of town. The demand is 50% in the north and 50% in the south so the city is considering opening a second storage location. What is the estimate of the total cycle inventory between both the warehouses?

22079

General piping has 8 warehouse locations across the country that they are considering consolidating to 3. The current inventory value is 3857801 dollars. What is your estimate of the future value of inventory after consolidation?

2362411

The annual demand is 2000 units and the lead time for restocking is 3 days. Assuming 50 weeks a year and 5 days a week what is the pipeline inventory?

24 Dl = dL (2000/50/5)*3

The annual demand for a product is 2000 units. The holding costs are $10/unit and the ordering costs are $25/order. If the current annual costs are $1250/year, what would be the savings if the company were to order using an economic order quantity?

250

The demand for a certain product is show below. The lead time is 3 days and the order quantity is 40 units. At the start of the day 1 the inventory on hand is 100 units. The demand shown occur during the day. Restocking orders are placed at the end of the day after the business closes. Incoming shipments are received during the day on the 4th day (after the order is placed, i.e. 3 days lead time). The reorder point is 70. Day Demand Inventory at start of day 1 15 100 2 10 3 15 4 10 5 15 6 10 7 5 Restocking orders will have to be placed on days:

3 and 6

A product has a 4 week lead time. The standard deviation of demand for each of the week is given below. What is the standard deviation of demand over the lead time? Week Standard deviation of demand 1 16 2 15 3 17 4 13

30.643

The annual demand for sand used during the winter months for the city of Boulder is 750000 pounds. The holding cost is $0.1 per lb per year and the ordering costs at $65 per order. Currently all the sand is stored in one location in the north end of town. The demand is 50% in the north and 50% in the south so the city is considering opening a second storage location. The total annual cost for the single sand storage location was estimated at $3123. What is the estimated total cost for the city when there are two storage locations?

4416

Best Buy carries an electronic component whose cost is $20 per unit. The annual demand for the component is 250000 units. Holding costs are $2/unit per year. Ordering costs are $15/order. The component is currently stocked in 3 warehouses around the state and used to supply the retail locations. The company is considering consolidating to a single warehouse location. What is the expected savings from the consolidation?

4911

Four warehouses have variable demand and the standard deviation of demand is shown below. What would be the reduction in safety stock at 95% service level (Z=1.65) if the locations were consolidated into one location Location Std Dev of Demnd 1 15 2 20 3 25 4 18

63.23

The average daily demand for a product is 25 and the lead time is 4 weeks (assume 7 days a week). The standard deviation of demand during the lead time is 8. For a 95% service level calculate The reorder point is:

713

If the current total inventory value across 10 warehouses is $6500000, and the company plans to expand it's operations to 13 warehouses, what would be your best estimate of the new total inventory value?

7411140

The daily demand for a product is 29 units. A company operates 6 days a week and 52 weeks a year. What is the annual demand?

9048

What drives companies to adopt sustainable practices?

Customers and legislation

The cycle inventory depends on: -lot sized ordered -amount of inventory on hand -cost of inventory ordered

Lot size ordered

The triple bottom line refers to what three things

People planet profit

A decoupling point is where inventory is held for final product differentiation. T/F?

True

A small automotive parts shop uses a continuous review system to restock cases of oil. At the start of the day they have 175 quarts. The reorder point is 200 and the order quantity is 48. They have 48 quarts scheduled to arrive in the next 2 days. A customer walks in and buys 35 quarts. Should they place another order? Yes or No

Yes

Bullwhip cause: -sales promotion -shortage gaming -orderbatching

countermeasure: -everyday low prices -proportional rational scheme -small and frequent orders

In order to use EOQ which of the following must be true:

demand and lead time are constant

As holding costs increase and setup costs increase the EOQ will:

depends on the relative increase in holding and setup costs

As setup costs increase the EOQ will:

increase

EOQ refers to:

the lot size that minimizes the total annual inventory ordering and holding costs