Supply Chain Management- Quiz 3

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order costs/ set-up costs

direct variable costs for making an order

1. economic order quantity model 2. economic manufacturing quantity model

fixed order quantity models:

independent demand

the demand for a firm's end products and has a demand pattern affected by trends, seasonal patterns, and general market conditions

service level

the in-stock probability is commonly referred to as the _____ _____

dependent demand

the internal demand for parts based on the demand of the final product in which the parts are used

reorder point (ROP)

the lowest inventory level at which a new order must be placed to avoid a stockout

seasonal inventory

when the companies choose to use spare capacity in a "slow season" in order to build up inventory for "busy season" and use it

normal distribution

when the lead time is constant while demand during the lead time is unknown, and can be specified using a ________ ________.

640; 670

demand for Fardo's private airplanes began on day _______ and stabilized by day ______

True

(True or False) RFID tags do not require direct line of sight to be read, and information on the tag is updateable

holding costs/ carrying costs components

1. cost of capital 2. handing charges 3. cost of warehousing 4. insurance 5. pilferage 6. natural shrinkage 7. taxes

order costs/ set-up costs

1. cost to prepare purchase requisition/ purchase order 2. cost of the labor required to inspect goods when they are received 3. cost to put away goods once they are received 4. costs to process the supplier invoice related to an order 5. cost to prepare and issue a payment to the supplier

1. raw materials 2. work-in-process 3. finished goods 4. maintenance, repair, and operating (MRO)

4 main categories of inventory

(s,S)

When current inventory reaches or falls below the reorder point, s, sufficient units are ordered to bring the inventory up to a pre-determined level, S.

case and pallet- level tagging

European countries use item-level tagging, whereas the U.S. uses what?

inventory is precisely known at every point in time

EOQ and ROP assume what?

(S, R)

If at the time of inventory review, a sufficient quantity is ordered to bring the inventory up to a predetermined maximum inventory level, S.

(nQ, s, R)

If at the time of inventory review, the physical inventory is equal to or less than the reorder point, s, the quantity, nQ, is ordered to bring the inventory up to the level between s and (s + Q)

(s, S, R)

If at the time of inventory review, the psychical inventory is equal to or less than the reorder point, s, a sufficient quantity is ordered to bring the inventory level up to the maximum inventory level, S.

Radio Frequency Identification

Successor to the barcode for tracking individual unit of goods.

economic order quantity model (EOQ)

a classic independent demand inventory system that provides many useful ordering decisions

inventory turnover ratio

a widely used measure to determine how efficiently a firm is using its inventory to generate revenue

1. the demand is known and constant 2. order lead time is known and constant 3. replenishment in instantaneous 4. price is constant 5. holding cost is known and constant 6. order cost is known and constant 7. stockouts are allowed

assumptions of the economic order quantity model

0; 50%

at the middle of the normal curve, where the reorder point equals the average demand, the required safety stock is ______ and the probability of a stock out is ______

Fardo and Tyran

average order quantity is about the same for Fardo's private airplanes as whose?

8 drums

average order size for Sorange's hardwood floor laminates

8 drums

average order size is about _____ for Entworpe's premium home appliances

Big Data

broadly refers to collections of data sets that are too large and complex to be processed by traditional database management tools or data processing software applications

640

demand began on day ______ for Tyran and Fardo's premium home appliances

RFID

can track returned goods through the supply chain and prevent counterfeiting

640; 670

demand for Entworpe's insulation products for commercial builders started on day ______ and was stable by day ______

1. tag 2. reader 3. communication network 4. RFID software

components of RFID

Tag

computer chip and an antenna for wireless communication

communication network

connects the readers to transmit inventory information to the enterprise information system

active tags

contain a power source (batter) to source their power

(s,Q)

continuous review policy that orders the same quantity, Q, when physical inventory reaches the reorder point, s

$100,000

cost of a new warehouse

$500,000

cost of building a factory

$50,000

cost of capacity for one drum per day

cost of goods sold

cost of revenue is the same as what?

$20,000

cost per truckload between different regions on continent

$15,000

cost per truckload within the same region

$150

cost to mail one drum within the same region

direct costs

costs directly traceable to unit produced (e.g., labor, materials)

fixed costs

costs independent of the output quantity

indirect costs

costs that cannot be traced directly to the unit produced

variable costs

costs that vary with output level

safety stock

demand and lead time are never certain and require ______ ______.

1. subassemblies 2. components 3. raw materials

examples of dependent demand items

private airplanes

fardo

(annual demand/#days in the year) * the lead time Or (daily demand * lead time

formula for ROP

(cost of revenue/ average inventory)

formula for inventory turnover ratio

ZSL*s * √𝐿

formula for safety stock

d*t + ZSL*s * √𝐿

formula for statistical reorder point

SQRT ([2DS]/H) OR SQRT ([2DS]/kC)

formula for the EOQ model

reader

handheld or fixed-position RFID devide that reads the tags

good

high inventories are _______

NORM.S.INV(desired service level)

how can the z-score be found using excel?

60 days

how many days does it take to build a warehouse

90 days

how many days does it take to construct a new factory or to add capacity

continuous review system

implies that physical inventory is known at all times

holding costs/ carrying costs

incurred for holding inventory in storage

aggregate level focusing

instead of placing RFID tags on every item, the focus is more on what?

continuous review system

inventory review system that is costly

A items

items given the highest priority with larger safety stocks. A items account for approximately 20% of the total items & about 80% of the total inventory cost

B item s

items that account for the other about 40% of total items & 15% of total inventory cost.

C items

items that have the lowest value and hence lowest priority. They account for the remaining 40% of total items & 5% of total inventory cost.

linearly from day 640 until day 1430

long run average demand for Sorange's hardwood floor laminates will grow _____ from day ______ until day _____

RFID Software

manages the collection, synchronization, and communication of the data with systems, and stores the information in a database

640

marketing campaigns for the new target customers began on day ______

maintenance, repair, and operating (MRO)

materials used in production

periodic review system

more safety stock is required for what kind of inventory review system?

80% of objectives can be achieved by doing 20% of the tasks.

pareto principle

work-in-process

partially processed materials not yet ready for sales

service level

percentage of inventory cycles which end without stock-outs

periodic review system

physical inventory is reviewed at regular intervals

1. buffer uncertainty 2. decouple the dependencies between stages in supply chain

primary functions of inventory

finished goods

products ready for shipment

EOQ

seeks to find the optimal order size that minimizes the sum of the annual order costs and annual holding costs

independent demand

service parts are generally considered what kind of demand?

1. materials management 2. manufacturing 3. distribution center 4. retail store

steps by which RFID can automate the supply chain

continuous review

stock records and actual quantity require _____ _____

RFID

synchronize information and physical flow of goods across the supply chain from manufactures to retail outlets and to the consumers at the right place at the right time

passive tags

tags that use the energy generated from the wave and do not store power on the tags

a month later

when does the demand for Tyran and Fardo's premium home appliances grow to its long-tun average?

1. electronic product code (EPC) 2. international standards organization (ISO)

two major RFID standards

raw materials

unprocessed purchase inputs

fixed order quantity models

use fixed parameters to derive the optimum order quantity to minimize total inventory cost

pareto principle

used to determine which inventories should be counted and managed more closely than others

640

what day will Jacobs begin tracking demand in four new markets?

air conditioner retrofit kits

what is calopeia responsible for

insulation products for commercial builders

what is entworpe responsible for

hardwood floor laminates

what is sorange responsible for

not seasonal

what is the demand like for Tyran and Fardo's premium home appliances

250 units are purchased whenever its inventory drops to a predetermined level

what is the reorder point policy for Entworpe's insulation products for commercial builders

premium home appliance

what is tyran and fardo responsible for

the average of the twelve monthly ending inventories

what is used for the average inventory component

s=order point S= maximum inventory level Q= order quantity R= periodic review n= 1, 2, 3...

when analyzing continuous and periodic review systems, what do the following symbols stand for? s= S= Q= R= n=

when construction begins

when are costs incurred for building a new warehouse

cycle counting

z


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