Basic calculation for inventory is to keep average demand

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Reference no: EM132258636

1. If the average inventory is 500 and daily demand is 50 units per day for a given product, then the cycle inventory is 500/50 = 10.

True

False

2. If inventory "turns" every 2 months, which of the following is true?

This means that the average item spends 6 months in inventory

This means that the average item spends 2 weeks in inventory

This corresponds to 2 turns per year

This corresponds to 6 turns per year

Both A and D are True

3. The basic calculation for inventory is to keep the average demand on hand at all times.

True

False

4. The following are true of JIT inventory

The main idea is to increase safety stock

A low transportation cost is not important

Ordering costs must be low

JIT is not as vulnerable to supply chain disruptions

5. MRP is a computer system that integrates application programs in accounting, sales, manufacturing, and the other functions in a firm while ERP is a means for determining the number of parts, components, and materials needed to produce a product.

True

False

6. During the frozen time period for the MRP production schedule, changes in the production plan are typically not allowed.

True

False

7. In efficient auctions the product being auctioned will always be allocated to the person who has the highest valuation, or willingness-to-pay (WTP), for that item.

True

False

8. During Market Introduction, which of the following is NOT true?

Sales are generally very low

Goal is to create a market

Profits grow the most during this phase

Significant money is spent on marketing to build brand

9. What company was used as an example in the NPR podcast on pricing?

McDonald's

Target

Holiday Inn

Coca-cola

10. Spillage occurs when inventory is unused while spoilage is demand that cannot be met because the product was sold at too low a price

True

False

11. What is the relationship between inventory cost and transportation cost? Explain

12. What is one specific way you would recommend a bowling alley take advantage of revenue management?

13. Complete the MRP planning schedule below and answer the THREE questions below. Lead time is 1 week, safety stock is 0, order policy is EOQ of 75.

14. In each blank put only the number as your answer. (There is no partial credit for each individual part, so no need to show your work.)

Period: 1 2 3 4 5

Gross requirements 20 80

Scheduled receipts

Projected available balance 10

Net requirements

Planned order receipts

Planned order releases

1. What are the NET REQUIREMENTS in time period *3*? (Put the answer in the first blank below.)

2. What are the PLANNED ORDER RELEASES in time period *1*? (Put the answer in the second blank below.)

3. What are the PROJECTED AVAILABLE BALANCE in time period *3*? (Put the answer in the third blank below.)

15. A particular raw material is available at the following prices:

1) $3.10 for orders of less than 1000

2) $3.08 for orders between 1000 and 1999

3) $3.07 for orders 2000 and larger

Annual demand is 12000 items, order cost is $25, and holding cost is 20% of the item's cost per year. What is the economic order quantity?

Reference no: EM132258636

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