MKT 367 Ch 8

When a commercial janitorial service company predicts demand for janitorial services using commercial building permits issued, office leasing and vacancy rates, this is an example of:

a casual 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 $130. If the inventory carrying cost is 20 percent per year and assuming no ordering costs:

buying 100 at a time will save the company $2,130 per year.

Demand for buttons and zippers at a sportswear manufacturer is an example of:

derived demand

Closed-loop MRP:

provides a feedback loop between capacity and the master production schedule.

Supply chain inventory management involves establishing operational design of the physical flow of goods and services, but does not deal with managing information flows.

F

For the supply management function, time-based strategies that impact competitive advantage relate to cycle time reductions and greater coordination of materials and information flows.

T

In fixed quantity inventory models, a fixed economic order quantity is ordered when the reorder point is reached.

T

JIT requires frequent deliveries of relatively small quantities in compliance with quality standards.

T

The "bullwhip effect" is a term that refers to the buildup of inventory in a supply chain.

T

Stockout costs are the same whether it is a seller's market or a buyer's market.

F

Managing the consumption of services organizationwide:

is difficult because multiple contracts may exist at varying prices and terms with the same suppliers.

When the carrying cost of inventory is expressed as a percentage:

it is multiplied by the material unit cost to calculate the per unit carrying cost.

"C" items in ABC analysis are:

ordered frequently

Anticipation inventories are carried:

to cover a well-defined future need.

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

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

If there were 400 requests for a particular item in a year and 372 were immediately satisfied, the service coverage would be 372/400 or 93 percent.

T

MRP II systems link the organization's planning processes with its financial system to produce "what if" scenarios to help achieve sales and profitability projections.

T

Which statement is most accurate when thinking about deciding how much to buy:

balancing price, volume, carrying cost, and the cost of stockouts is key to successfully determining how much to buy at any point in time.

Any cost associated with having, as opposed to not having, inventory is included in inventory carrying costs, including (1) capital costs, (2) inventory service costs, (3) storage space costs, and (4) inventory risk costs.

T

In Kanban systems large raw material inventories are necessary.

F