Chapter 14 Flashcards
(14 cards)
1
Q
- The inventory that companies hold to protect themselves against uncertainties in either demand or replenishment time is called:
A
a. safety stock.
2
Q
- Individual links in the supply chain can stabilize their production at the most efficient level by using:
A
d. smoothing inventory.
3
Q
- The mismatch between timing of customer demand and supply chain lead times is what drives the need for:
A
b. anticipation inventory.
4
Q
- Which of the following relationships shows dependent demand inventory?
A
c. An automaker purchases four tires for each car they produce.
5
Q
- The beef jerky driver shows up every Monday to take orders from his convenience store customers. One fine Monday morning he stops in the Quik-E Mart and notes that there are only three sticks on the shelves. Consulting his route sheet, he discovers that the restock level is 40. The order quantity is therefore:
A
b. 37 sticks.
6
Q
- A hospital’s biomedical repair shop uses a 4-week periodic system to maintain the inventory on the blood pressure cuff repair parts. They use an average 40 adult arm cuffs with a standard deviation of 6 cuffs every four weeks. Cuffs aren’t the most critical item they carry, but the manager would like to avoid the embarrassment of a stockout at least 95% of the time. What should their restocking level be?
A
c. 50 cuffs
7
Q
- Which of these conditions is NOT necessary for the economic order quantity model to be valid?
A
d. The item has a constant safety stock.
8
Q
- If demand increases by 100%, the average inventory held in a system governed by the EOQ model:
A
d. is increased by 40%.
9
Q
- A law firm always orders 50 cases of paper from their office supply company. They incur an annual holding cost of $15 per case and have an ordering cost of $25 each time they place an order. If their annual demand is 480 cases, how much could they save annually by switching to their economic order quantity?
A
a. $15
10
Q
- A manufacturer replenishes their packaging materials according to the economic order quantity model. They use 25,000 cases of packaging materials per year and order 500 cases at a time. Their cost to carry a case in inventory for a year is $12. How much does it cost them to place an order with their supplier?
A
b. $60
11
Q
- Which of these conditions is likely to cause a decrease in the probability of a stockout?
A
b. lower lead time
12
Q
- A university orders all office supplies, including red grading pens, out of a catalog from the same supplier. Conservative estimates of the demand for these red pens are 12,000 pens per year. There is a $25 charge for placing an order and the university has a $10 annual cost for holding these pens. Prices for the pens are based on the quantity purchased, so if less than 100 are ordered, the unit price is $2.50, if 100 to 299 are ordered, the unit price is $2.40, if 300 to 499 are ordered, the unit price is $2.30, and if 500 or more are ordered, the unit price is $2.20. What order quantity will result in the lowest total annual cost to the university?
A
d. 500
13
Q
- A local barbecue joint makes one massive batch of potato salad each day. If they run out of this savory side before the end of the day, their last few customers are less than satisfied, but if they make too much, they sell it to the local hog farmer for feed. Every serving costs an equivalent of $0.23 to make, but can be sold for $1.50 to customers and for $0.08 to the hog farmer. The average daily demand is for 200 servings with a standard deviation of 20 servings. How many servings should be made each day?
A
b. 225
14
Q
- Supply chain inventory:
A
a. increases in cost as materials move downstream.
