chapter 8

____ stock refers to inventory that is held in addition to cycle stock to guard against uncertainty in demand and/or lead time.

Buffer

Inventory costs in the United States in the twenty-first century represent approximately ____ of total logistics costs.

One-third

Concerning the EOQ model, if the ordering costs increase by 10% and the product value increases by 10%, then the EOQ will:

stay unchanged

The EOQ determines:

the point at which carrying costs equal ordering costs

Inventory carrying costs in the United States in the twenty-first century have ranged between ____ and ____ percent.

20; 25

____ recognizes that all inventories are not of equal value to a firm and thus all inventories should not be managed in the same way.

ABC analysis of inventory

____ stock refers to inventory that is needed to satisfy normal demand during the course of an order cycle

Base

____ items refer to those that are used or distributed together.

Complementary

Holding high levels of inventory result in ____ inventory carrying costs and ____ stockout costs.

High; low

____ refers to stocks of goods and materials that are maintained for many purposes, the most common being to satisfy normal demand patterns.

Inventory

____ stock refers to inventory that is en route between various nodes in a logistics system.

Pipeline

____ stock is carried to stimulate demand.

Psychic

ABC analysis of inventory:

Recognizes that inventories are not of equal value to a firm

____ stock refers to inventory that is held for several reasons, to include seasonal demand, projected price increases, and potential shortages of product.

Speculative

____ products refer to products that customers view as being able to fill the same need or want as another product.

Substitute

In the United States, ____ has traditionally provided a convenient starting point when estimating the interest charges associated with maintaining inventory.

The prime rate of interest

Dead inventory (dead stock) refers to product for which there is no sales during a ____ month period.

Twelve

Under ____, the size and timing of replenishment orders are the responsibility of the manufacturer.

Vendor-Managed Inventory

Under conditions of certainty, a reorder point is equal to:

average daily demand in units times the length of the replenishment cycle

The economic order quantity (EOQ) deals with calculating the proper order size with respect to ____ costs and ____ costs.

carrying; ordering

Inventory turnover can be calculated by:

dividing the cost of goods sold by average inventory

Concerning the EOQ model, if demand or annual usage increases by 10%, then the EOQ will:

increase

Inventory flow diagrams illustrate that safety stock can prevent two problem areas, ____ and ____.

increased rate of demand; longer-than-normal replenishment

Inventory shrinkage:

refers to the fact that more items are recorded entering than leaving warehousing facilities

Each of the following is a component of inventory carrying cost except:

shrinkage cost