A company which produces electricity, like Progress Energy, is considering buying extra coal to hold in inventory. They want to buffer against a potential strike at a major coal producer which would likely result in a significant price increase.
Hedging
Companies hold safety stock inventory due to
uncertainty in supply or demand.
"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)"
inventory
A men's suit is composed of primary material, lining, thread, buttons, and a zipper. A zipper is an
Dependent Demand item
The cost and value of inventory increase as materials move down the supply chain. One way operations and supply chain managers counteract the negative aspect of this fact is by
inventory pooling.
Not an remedy for the Bullwhip effect
Offering large volume price discounts to distributors and retailers.
The owner of a vending machine company has weekly stops to check the soda machine at NC State. She checks the inventory levels and fills the machine back up to its full restocking level.She is using which of the following types of independent demand inventory systems?
periodic review system
Which of the following is a characteristic of the Continuous Review Model for inventory management?
Will have less safety stock inventory than a periodic review model
Franklin BBQ is open 7 days per week. Joe Bob reorders pickles every Monday for delivery on Wednesday. Average daily demand is 10 gallons with a standard deviation of 2 gallons per day. What is the standard deviation of demand for pickles during the review period plus the lead time (e.g., uncertainty period)? (Select the nearest number)
6 GALLONS
Franklin BBQ operates 50 weeks per year. Weekly demand averages 30 beef briskets per week with a standard deviation of 6 briskets. Ordering costs are $25 and annual inventory holding cost is $4 per brisket. Delivery lead time from the vendor is 2 weeks. How many briskets should Joe Bob order to minimize his costs? (Select the nearest number)
137 briskets
Silly Sally sells sea shells at the Sea Shore Store. The average and standard deviation of demand during replenishment lead time is 60 and 10 units, respectively. Sally sipped Sangria at the Silver Spoon Saloon and forgot to place a replenishment order. If Sally places an order at the end today when she has 65 units on hand, what is the probability she doesn't run out of sea shells before the replenishment arrives?
69%
Guadalupe sells imported watches from Germany on his e-commerce website. He wants to determine the Economic Order Quantity for his best selling watch. Which of the factors below is not relevant to this decision?
Replenishment lead time.
Hart's Floral Shop sells bouquets for special occasions. Annual demand is 500 bouquets, the company's cost to place an order with its vendor is $25, and the cost to hold a bouquet in inventory for a year is $15. If Hart orders from its vendor in quantities of 45 bouquets, what is the total annual inventory holding cost? Choose the closest number.
338
Diamond Hardware Store sells picture-hanging kits. Annual demand is 4,000 kits. The cost to place an order from Diamond's vendor is $50 and the holding cost is $10 per kit per year. If diamond orders in quantities less than 150 units, each kit costs $2.00. If orders are between 150 and 249units, each kit costs $1.75. If diamond orders greater than 250 units, the price is $1.50 per kit. How many kits should Diamond order to minimize costs?
250
Assume the standard deviation of demand per week is 8 units and replenishment lead time is 4 weeks. What is the standard deviation of demand during lead time?
16 units
In 2014 Wal-Mart Stores held $43,858 million dollars of inventory. Annual inventory holding costs are approximately 25% of item value. Assume that during your summer internship, you invented an improved forecasting model that reduced Wal-Mart's inventory level by 1% without lowering the service level. How much would this save Wal-Mart each year? (Pick the closest number)
$109.645 million
Which of the following is not a component of inventory holding cost?
Sales expenses on inventory
On December 31, 2014 Wal-Mart Stores reported total 2014 revenues of $476,294,000,000. On hand inventory was $43,858,000,000 and total assets were $204,751,000,000. What was the inventory turnover for 2014? (Pick the closest number)
10.9 turns
Mertle Mouse sells Swiss cheese gift sets at the airport. She buys the gift sets from a supplier in Wisconsin. The average and standard deviation of demand during replenishment lead time are 45 and 15 units, respectively. What would be the reorder point for a 97% probability of not stocking out during replenishment lead time? (Select the closest number.)
73 units
What is the Z value for an 85% service level?
1.04
Some companies want their supply chain partners (suppliers) to co-locate, i.e., move as
close as possible to them. This would reduce
Transportation Inventory
The type of demand which comes from outside the organization, is unpredictable, and
usually forecasted is
Independent