Chapter 8 opsm

Inventory use that is determined directly by customer orders is called:

Independent demand

Which statement is most accurate when thinking about deciding how much to buy:

balancing price, volume, carrying cost, and the cost of stockout is key to successfully determining how much to buy at any point in time.

on an annual requirement of 100 items spread evenly throughout the year, any purchaser has an opportunity of buying 100 units at a price of $100 each, or buying 10 units at a time at a price of $120. if the inventory carrying cost is 25 percent percent per year and assuming no ordering costs:

buying 100 at a time will save the company $900 per year.

Stockout costs:

can vary depending on whether it is a seller's or a buyer's market.

When a retailer uses daily sales of each product to identify patterns and to forecast inventory requirements, this is an example of:

A time series forecasting technique

The three main inputs of a material requirements planning (MRP) system are:

An accurate bill of material, a master production schedule, and the inventory record.

"A" items in ABC analysis are:

Particularly critical in financial terms

A buffer inventory

Protects against uncertainties in supply and demand

Closed-loop MRP;

Provides a feedback loop between capacity and the mater production schedule

When the carrying cost of inventory is expressed as a percentage:

it is multiplied by the material unit cost to calculate the per unit carrying cost