Intro to Operation Quiz 14

Annual cost of goods sold/Average inventory level

An inventory turnover can be calculated for the overall stock of inventory as ______.

larger

As the service level approaches 100%, ______ inventories are required.

Pareto's

For many events, roughly 80 percent of the effects come from 20 percent of the causes, states __________ law.

765 items

Given: average demand during the lead time (m) = 600 items and buffer stock (s) = 165 items. Calculate the reorder point (R).

$1,400

Given: carrying rate = 20%/year; unit cost = $28; lot size = 500 units. Calculate the annual carrying cost.

Anticipation

If changes in demand or supply are expected, firms hold an __________ inventory.

If the stock position is below the reorder point, an order is placed to raise the stock position to the target level. If the stock position is above the reorder point, no order is placed.

If the hybrid inventory management system is used (a mixture of Q and P systems), and periodic review is performed, which of the following statements is correct. Select all that apply.

independent

Service industry (hospitals, schools) inventories are ______.

stockout cost stockout probability

The value of the reorder point (R) is based on ______ or ______. Select all that apply.

service

To estimate the reorder point, management must determine the _________ level.

False

True or false: Bar coding does not reduce hand counting and recording of inventory data.

Inventory

is a stock of materials used to facilitate production or satisfy customer demands.

dependent

A requirements philosophy is used for ______ demand.

inventory records demand forecast

A vendor under VMI is given access to the firm's ______. Select all that apply.

396 items

Given: lead time = 9 days (to receive order from suppliers); standard deviation of daily demand (σdaily) = 80 items; safety factor (z) = 1.65. Calculate safety stock (s).

-different ordering and holding costs -higher service levels

If the inventory turnover os low, it could be explained by ______. Select all that apply.

decrease, increase

If the ordered lot size increases, the ordering frequency will ______ the average inventory level will ______.

from 15% to 30%

In practice, carrying costs often range ______ per year.

false

In the economic order quantity (EOQ) model, the lead time is a variable and is unknown.

Yes

Is it possible to define the service level as the percentage of time the system has stock on hand?

A

Items of which class require the highest level of attention and management control?

target

The __________ inventory level in the P system is set to cover demand until the next periodic review plus the delivery lead time.

Q system

The continuous review system is also known as ______.

safety stock

The inventory that is maintained to protect against uncertainties is called a ______

normal

The probability distribution of demand over lead time is assumed to be ______.

nonlinear

The relationship between service level and inventory level is ______.

turnover

The relationship between service level and inventory level is ______.

close trading partners

VMI is best suited to which of the following types of supply chain relationships?

On-hand and on-order inventories.

What defines the stock position?

It costs 20 cents to hold $1 of inventory for a month.

What does it mean "20 percent monthly holding cost"?

Target inventory minus the stock position.

What is the amount to be ordered at each review in the periodic review system?

The assumption of the constant demand.

What is the most serious limitation of the EOQ model?

20% of the items and 80% of the dollar usage.

What is typical proportion of items and dollar usage in class A?

Radio-frequency identification

What technology is used for tracking the movement of goods?

Replenishment philosophy

Which inventory management approach is appropriate for independent demand?

P system

Which inventory management system does not have reorder point?

Raw materials inventory

Which inventory type is waiting to enter the production process?

The demand has random variations.

Which of the following assumptions is incorrect for the EOQ model?

Cost of storage

Which of the following includes insurance cost?

Independent

______ demand is influenced by market conditions outside the company.