MGT 333 Quiz ch 8

Which statement is most accurate when deciding how much and when to buy?

balance price, volume, carrying cost, and the cost of stock-outs

anticipation inventories are carried

to cover an expected future need

JIT requires frequent deliveries of relatively small quantities in compliance with quality standards

true

Holding extra inventory to protect against a supply disruption from a supplier strike is an example of buffer inventory

True

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

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

When a commercial janitorial service company predicts demand for its services using commercial building permits issued, office leasing and vacancy rates, this is an example of:

a causal model

ordering raw materials from a supplier in full truck loads only is an example of decoupling inventory

false

A company manufactures 1,200 cylinders per week, each requiring a pressure gauge. The purchase price of the pressure gauge is $3.20. The company controller estimated annual holding costs at 25 percent per year, while the cost of placing an order was estimated at $55.00. Assuming that the plant operates 45 weeks per year, the EOQ for the pressure gauge is:

2,725 units

On an annual requirement of 100 items spread evenly throughout the year, a purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $130. If the inventory carrying cost is 20 percent per year and assuming no ordering costs:

Buying 100 at a time will save the company $2,130 per year