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SCM330 1 CH11 TEST WITH
COMPLETE SOLUTION
_____ is when the expected cost of a shortage equals the expected cost of having excess units within a single-period inventory system. - ANSWER target service level
_____ is inventory items whose demand levels are beyond a company's complete control. - ANSWER independent demand inventory
the target stocking point is _____ - ANSWER when the expected cost of shortage equals the expected cost of having excess units within a single-period inventory system
hedge inventory - ANSWER a form of inventory buildup to buffer against some event that may not happen
in the continuous review system, _____ is the cost of placing an order, regardless of the order quantity. - ANSWER S
in the continuous review system, H is _____. - ANSWER the cost of holding a single unit in inventory for a year
inventory pooling is _____. - ANSWER holding safety stock in a single location instead of multiple locations
one variable is _____, which states that the inventory item of interest has a constant demand per period. - ANSWER demand
safety stock is _____. - ANSWER extra inventory that a company hold to protect itself against uncertainties in either demand or replenishment time
in the continuous review system, _____ is the number of periods that must pass before a replenishment order arrives. - ANSWER lead time
a periodic review system is _____. - ANSWER an inventory system that is used to manage independent demand inventory
_____ is inventory items hose demand levels are tied directly to a company's planned production of another item. - ANSWER dependent demand inventory
an inventory driver is _____. - ANSWER business conditions that force companies to hold inventory
unpredictable, and usually forecasted is _____. - ANSWER independent
"Any idle resource held for future use dash- those stocks or items used to support production (raw materials), supporting activities (drill bits) and customer service (finished goods, spare parts)" is the definition of _____. - ANSWER inventory
Managers must decide where in the supply chain to hold inventory. In general, the decision about where to position inventory is based on two general truths: - ANSWER the flexibility of inventory decreases as materials move down the supply chain
the cost and value of inventory increase as materials move down the supply chain
T or F: the order quantity in a periodic review system rises as the on-hand inventory falls. - ANSWER true
T or F: in order for the economic order quantity model to work, demand must be known and constant. - ANSWER true
Mr. Drucker uses a periodic review system to manage the inventory in his dry goods store. He likes to maintain 15 sacks of sugar on his shelves based on
the annual demand figure of 225 sacks. It costs $2 to place an order for sugar and costs $1 to hold a sack in inventory for a year. Mr. Drucker checks inventory one day and notes that he is down to 9 sacks; how much should he order? - ANSWER 6 sacks
T or F: decreases in the standard deviation of demand reduce the amount of safety stock that should be held. - ANSWER true
the inventory that companies hold to protect themselves against uncertainties in either demand or replenishment time is called _____. - ANSWER safety stock
the bullwhip effect says that _____. - ANSWER the father upstream the supply chain, the greater the impact of a small disturbance downstream
a company makes tools, such as hammer and tape measures. One of their primary raw materials is steel and if they run out of steel they cannot make tools. The inventory level for steel is constantly monitored and when the reorder point is reached, an order is released for the economic order quantity.
The tool company uses which of the following independent demand inventory systems for steel? - ANSWER continuous review system
