SCMA 320 Homework 9

Refer to Scenario 9.8. If the company uses a 2-week ordering period (P=2 weeks), how much safety stock should the company carry? Pick the closest answer.

10.5

Refer to Scenario 9.9. The average demand during the 5​-week lead time is _______ pints. Pick the closest answer.

1550

Refer to Scenario 9.7. What should the lot size be?

Greater than 4000

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 40 units Open orders (scheduled receipts): 100 units Backorders: 60 units Reorder point: 100 units Quantity per order: 50 units Which of the following statements best describes Hess's situation regarding inventory replenishment?

Hess should place an order for 50 units, since the inventory position is less than the reorder point.

SCENARIO 9.9: In a Q ​system, the demand rate for strawberry ice cream is normally​ distributed, with an average of 310 pints per week. The lead time is 5 weeks. The standard deviation of weekly demand is 10 pints. Refer to the standard normal table for​ z-values. The reorder point that results in a​ cycle-service level of 96 percent is _______ pints. Pick the closest answer

1600

Refer to Scenario 9.11. What are the expected annual ordering costs? Pick the closest answer.

2000

Scenario 9.11. Suppose a Home Depot uses a Q system to manage its inventory of Kohler Cimmaron toilet. Annual demand for the toilets is 800 units per year. Holding costs are $20 per toilet per year (about 10% of the toilet's selling price). The costs of each order are $500. The company needs to carry 5 toilets in safety stock to adequately absorb uncertainty in demand. What are the expected annual holding costs under this system? Pick the closest answer.

2000

Refer to Scenario 9.9. The standard deviation of demand during the 5​-week lead time is ________ pints. Pick the closest answer.

22.5

Scenario 9.10 Suppose a grocery store uses a P system for its inventory of apples, ordering once per week. Demand for apples averages 40 cases per week, with a standard deviation of 5 cases per week. Holding costs for the apples are $10 per case per year. The costs of each order are $150. The company carries 3 cases in safety stock to absorb uncertainty in demand. The company operates 52 weeks per year. What are the expected annual holding costs? Pick the closest answer.

230

SCENARIO 9.8: A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its​ 1-irons, which have the following​ characteristics: Demand ​(D) = 2,000 ​units/year, normally distributed Standard deviation of weekly demand​ = 3 units Ordering cost​ = ​$ 50 ​/order Holding cost​ (H) = $ 6.00​/unit per year Desired service level​ = 90 ​% Lead time​ (L) = 5 weeks If the company uses a periodic review system, what should the review period (P) be (in weeks)? Pick the closest answer.

4.75

Refer to scenario 9.9. How much Safety Stock is needed to meet the desired service level? Pick the closest answer.

40

Refer to scenario 9.10. What are the expected annual ordering costs? Pick the closest answer.

7500

Which one of the following statements is BEST?

A P system requires more safety stock than a Q system.

Refer to Scenario 9.8 Suppose the company holds 20 units in safety stock, and uses a two-week ordering period. It is time to place an order, and the manager counts a current inventory position of 100 units. How many units should be ordered?

Between 175 and 225 units

An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system) or a P system (periodic review system) answers these questions?

Under a P system, an order is placed to replenish the inventory position up to the target level T every P time periods.

Which one of the following statements is BEST?

When no safety stock is maintained, stockouts will occur during approximately 50% of the cycles.

Scenario 9.7 Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular model is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year. How much safety stock is needed to satisfy a 98% cycle-service level?

greater than 130 units This is a Q system. Recall that SS = z*(sigma_d)*sqrt(L)

Use the information in Scenario 9.7. What service level does a reorder point of 1,524 imply?

greater than 60% but less than or equal to 65%

Which one of the following descriptions best defines the service level?

the desired probability of not running out of stock in any one inventory cycle