Safety stock exists for which of the following reasons?
To provide protection against the uncertainties of supply and demand.
Which of the following is NOT a role of inventory?
Increasing quality of finished goods
A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory?
Work-in-process
Ball Corporation sells aluminum cans to Anheuser-Busch to use in making six packs of Budweiser. Anheuser-Busch has a warehouse located at its plant in St. Louis which contains boxes of empty cans received from Ball. From Anheuser-Busch's perspective, the
Raw materials and components inventory.
Taxes and insurance costs are an example of which of the following costs?
Carrying (or holding) costs.
John Jones of Jones Corporation determined that the cost related to processing an invoice from a supplier was approximately $100 per invoice. This cost is an example of:
Order cost.
Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000. Johnson has determined inventory carrying cost to be 25 percent. Johnson's inventory carrying cost was:
$275,000.
Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is the annual inventory turnover?
9
If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are $50,000 per day, what is the days of supply?
28 days
Natalie's Cabinets makes cabinets at an average cost of $2,000. Last year, Natalie sold 5,000 units of the cabinets and had an annual turnover rate of 4 times. Natalie has estimated her inventory carrying cost to be 25 percent. What was Natalie's annual i
$625,000
Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve this turnover rate, what should be the average number of days of supply?
16.6 days
Independent demand inventory models can be used to determine:
All of these.
Jones Manufacturing Inc. purchases a component from a Chilean supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier
$2,750
Exhibit 07.1 University Book Store buys women's polo T-shirts from a supplier according to the price schedule shown below. The store sells 500,000 T-shirts each year. The annual carrying cost of T-shirts is 25 percent, and the ordering cost is $40.
Refer
2,500
Exhibit 07.1 University Book Store buys women's polo T-shirts from a supplier according to the price schedule shown below. The store sells 500,000 T-shirts each year. The annual carrying cost of T-shirts is 25 percent, and the ordering cost is $40.
Refer
$16,018,000
Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha's order cost has been determined to be $50 per order. Alpha carries no safety stock at all. What is Alpha's annual inventory carrying co
$500
Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha has determined its annual inventory carrying cost is $2,000. Alpha carries no safety stock at all. What is Alpha's order cost per order?
$200`
Jones Company has calculated that the EOQ for a particular item is 1,000 units. However, Jones does not have enough capital to order that many units each time, so it only orders 250 units at a time. This will result in:
Lower annual inventory carrying cost than ordering the EOQ quantity.
Blue Star Co. has been using the production order quantity inventory model. If annual demand, daily demand, and the production rate increase to four times their original amounts, which of the following is/are possible consequence(s)?
The order quantity will double.
Bryson Carpet Mills produces a variety of different carpets. Changing from production of one carpet to another involves a setup cost of $500. One particular carpet costs $8/yard to produce. Annual demand for this style is 50,000 yards. Bryson Mills produc
5,976 yards
Exhibit 07.2 A company has average demand of 30 units per day. Lead time from the supplier averages 7 days. Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units. One unit costs $10 and the inv
$82.50
Exhibit 07.2 A company has average demand of 30 units per day. Lead time from the supplier averages 7 days. Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units. One unit costs $10 and the inv
257 units
Exhibit 07.03. HighLife Corporation has the following information:
Average demand = 30 units per day
Average lead time = 40 days
Item unit cost = $45 for orders of less than 400 units
Item unit cost = $40 for orders of 400 units or more
Ordering cost = $5
365
Exhibit 07.03. HighLife Corporation has the following information:
Average demand = 30 units per day
Average lead time = 40 days
Item unit cost = $45 for orders of less than 400 units
Item unit cost = $40 for orders of 400 units or more
Ordering cost = $5
$362,325
Exhibit 07.03. HighLife Corporation has the following information:
Average demand = 30 units per day
Average lead time = 40 days
Item unit cost = $45 for orders of less than 400 units
Item unit cost = $40 for orders of 400 units or more
Ordering cost = $5
149
A company recently lowered its service performance from 99 percent product availability to 97 percent product availability. The change saved the company exactly $1 million per year in inventory carrying cost. Senior management now wants to lower the servi
Less than $1 million.
When calculating a reorder point (ROP), which of the following factors WOULD
NOT affect the calculation?
Item's EOQ
Which of the following statements is true regarding a periodic review inventory system?
None of the selections are true.
Bill's Food Emporium uses the periodic system to order cans of Cajun seasoning every 30 days. It typically takes the supplier 10 days to resupply Bill. Sales average 8 units per day with a standard deviation of 2 units per day. Bill does not carry any saf
298
Jasper's Grocery places an order for Monster every 15 days. Once the order is placed, delivery to the store typically occurs in 3 days. Average demand is 5 cases per day, and the standard deviation of demand is 1.5 cases per day. The store policy is to st
80 cases
You have a one-time opportunity to buy an item. It costs $20 and sells for $50. It has $4 salvage value if it does not sell. What is the target service level?
65.21 percent
At each of its home games, the Washington Check-Kiters football team sells programs that give statistics of the teams involved in the current game's contest. Since each game brings a different visiting team, a program is only of value for one contest, and
50 percent
Johnson Manufacturing has decided to consolidate its warehouses and reduce the number of locations from 12 to four. However, Johnson desires to maintain the same service level in terms of the risks of running out of stock in attempting to meet customer de
The required safety stock will decline by approximately 58 percent.
What might a company do to reduce the amount of cycle stock it holds?
Attempt to reduce order costs.
Which of the following might a company try to do to reduce the total amount of safety stock it holds?
All of these.
The ABC analysis used for analyzing inventory is an example of:
Pareto's Law.
Which of the following pieces of information is identified in the original 12-digit UPC code?
The manufacturer of the item.
___________ inventory is the costliest form of inventory one can hold.
Finished goods
When small changes generated by a customer produce progressively larger changes at each stage upstream in the supply chain, this is known as:
Bullwhip effect.
Which of the following are NOT often associated with a vendor-managed inventory (VMI) arrangements?
Customers recommend to suppliers how they should schedule production.