SCM Ch 8

On an annual requirement of 100 items spread evenly throughout the year, any 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 $150 each. The inventory carrying cost is 25 percent per year. There is no ordering costs. Consider the total cost of purchasing and holding the inventory.

If all 100 purchased at one time: 100 items × $100 = $10,000 purchase price and 100/2 = 50 units in inventory on average, and 50 × $100 × .25 = $1,250 in carrying costs for a total cost of $11,250. If purchased 10 at a time, 100 × $150 = $15,000 purchase price and 10/2 = 5 units in inventory on average, and 5 × $150 × .25 = $187.50 in carrying cost for a total cost of $15,187.50. Therefore, buying 100 at a time will save $15,187.50 − $11,250 = $3,937.50.

Which of the following statement is false about the inflation of forecasts?

The buyer may discount the supplier's forecast to avoid unnecessarily raising capacity.

Customers' demand for cars is an independent demand for a car manufacturer.

True

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.

Capacity requirements planning (CRP)

plans for manufacturing resources based on the material plan from MRP

The demand for the current period is 69 and the demand forecast made for the current period (made in the previous period) was 67. What is the demand forecast for the next period using exponential smoothing with smoothing parameter 0.3?

(0.3)(69)+(0.7)(67)=67.6

During a period of ten weeks, a manufacturer received an order for 100 units each week, filled nine of the orders fully and immediately, and filled 60 units for the remaining order immediately (i.e., backlogged 40 units). What is the fill rate during the period?

96% ((9*100)+60)/((9*100)+60+40)

Which of the following is not a basic time series pattern?

Causality

Statistical significance in a regression model proves a cause-and-effect relationship between a factor and the quantity of sales.

False