Ch. 8: Quantity and Inventory

CPFR stands for:

Collaborative Planning, Forecasting and Replenishment

When a carpet manufacturer predicts carpet sales by using building permits issued, mortgage rates, apartment vacancy rates, and so on, this is an example of:

a causal model.

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. If the inventory carrying cost is 20 percent per year and assuming no ordering costs:

buying 100 at a time will save the company $3,937.50 per year.

"C" items in ABC analysis are:

often managed by the supplier.

A material requirements planning (MRP) system:

requires explosion of the bill of material as the basis of planning.

A reduction in set-up costs and time impacts:

cycle inventories.

JIT requires:

frequent deliveries of relatively small quantities.

Capacity requirements planning (CRP):

performs for manufacturing resources what MRP does for materials.

The following cost is not a carrying, holding, or possession cost:

the purchase cost of the item.

Anticipation inventories are carried:

to cover a well-defined future need.