SCMT 370 Ch 8

A company manufactures 1,200 cylinders per day, each requiring a pressure gauge. The purchase price of the pressure gauge is $3.20. The company controller estimated annual holding costs at 25 percent per year, while the cost of placing an order was estimated at $55.00. Assuming that the plant operates 45 weeks per year, the EOQ for the pressure gauge is:

2,725 units.

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

False

Kanban systems are most useful for low-volume parts used on an infrequent basis. True False

False

The Delphi technique is a method of quantitative forecasting. True False

False

Usage of independent demand items is determined by the production schedule. True False

False

Cycle inventories are used to:

reduce the number of setups.

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

a causal model.

Independent demand items are:

determined directly by customer orders.

Managing the consumption of services organization-wide:

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

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

True