MGT 333 - Ch. 8

A company manufactures 420 cylinders per day, 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.

Ordering raw material from a supplier in full truck loads only is an example of decoupling inventory.

False

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

Balance price, volume, carrying cost, and the cost of stock-outs.

The Delphi technique is a method of quantitative forecasting.

False

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

True

Decoupling inventories are used to:

accommodate different rates of manufacturing or patterns of demand.

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

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

Cycle inventories are used to:

reduce the number of setups, as well as order costs.

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.

Anticipation inventories are carried:

to cover a future demand.