Supply Chain Management Ch 14 MBA 6040
All of the following are types of costs related to the inventory cost structure, except ______.
shipping cost
Which of the following inventories have independent demand?
Spare parts for replacement
Given: carrying rate = 20%/year; unit cost = $28; lot size = 500 units. Calculate the annual carrying cost.
$1,400
Given: demand rate = 12,000 units/year; cost per order = $1,200; lot size = 1,000 units. Calculate the annual ordering cost.
$14,400
The famous economic order quantity (EOQ) formula was developed in ______.
1915
What is typical proportion of items and dollar usage in class A?
20% of the items and 80% of the dollar usage.
Given: lead time = 6 days (to receive order from suppliers) and standard deviation of daily demand (σdaily) = 100 items. Calculate standard deviation of demand during the lead time (σ). Round your result to the whole number.
245 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).
396 items
ABC analysis of inventory is also called the ______ rule.
80-20
An inventory turnover can be calculated for the overall stock of inventory as ______.
Annualcostofgoodssold/Averageinventorylevel
Which of the following includes insurance cost?
Cost of storage
_____ cost includes variable space cost, insurance and taxes.
Cost of storage
True or false: Bar coding does not reduce hand counting and recording of inventory data.
False
True or false: If the final products are build from components, the demand of those components is independent on the demand for the final product.
False
Which of the following products have a high risk of becoming obsolete? Select all that apply.
Fashion items Technology items Food items
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.
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.
______ demand is influenced by market conditions outside the company.
Independent
What defines the stock position?
On-hand and on-order inventories.
The periodic review system is also known as ______.
P system
Which inventory management system does not have reorder point?
P system
Which inventory management system should be used for inexpensive items whose inventory level is monitored only at specific intervals?
P system
In which inventory management system the order can be placed whenever inventory is needed?
Q
The continuous review system is also known as ______.
Q system
Which inventory management system requires smaller safety stock?
Q system
What technology is used for tracking the movement of goods?
Radio-frequency identification
Which inventory type is waiting to enter the production process?
Raw materials inventory
Which inventory management approach is appropriate for independent demand?
Replenishment philosophy
What is another term for the ordering cost?
Setup cost
Which of the following assumptions is incorrect for the EOQ model?
The demand has random variations.
Which of the following should be constant for the use of EOQ? Select all that apply.
The lead time The demand rate The unit item cost
What is the reason behind carrying cycle inventory?
To allow economic production and purchase.
True or false: The service-level probability is 100% minus the stockout probability.
True
Is it possible to define the service level as the percentage of time the system has stock on hand?
Yes
VMI is best suited to which of the following types of supply chain relationships?
close trading partners
The inventory resulting from the purchase or production of materials in lots is called ______ inventory.
cycle
If the ordered lot size increases, the ordering frequency will ______ the average inventory level will ______.
decrease, increase
A requirements philosophy is used for ______ demand.
dependent
In practice, carrying costs often range ______ per year.
from 15% to 30%
If the inventory turnover os low, it could be explained by ______. Select all that apply.
higher service levels different ordering and holding costs
___ is a stock of materials used to facilitate production or satisfy customer demands.
inventory
A vendor under VMI is given access to the firm's ______. Select all that apply.
inventory records demand forecast
As the service level approaches 100%, ______ inventories are required.
larger
The relationship between service level and inventory level is ______.
nonlinear
Bar coding enables the use of ______ data collected as items are scanned and sold.
point of sale
The inventory that is maintained to protect against uncertainties is called a ______
safety stock
To estimate the reorder point, management must determine the
service level
The inventory acts as a buffer between ______.
supply rate and demand rate
The ___ of 1 inventory level in the P system is set to cover demand until the next periodic review plus the delivery lead time.
target
The protection interval is defined as ______.
the lead time (L) plus the periodic review interval (P)
Inventories that are moving from one point to another in supply chain are called ______ inventories. Select all that apply.
transit pipeline
Inventory ___ indicates the number of times (during a year) the inventory in stock is completely renewed.
turnover
The continuous review system (Q system) is completely determined by ______.
two parameters, order size (Q) and reorder point (R)
VMI stands for
vendor managed inventory.
