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Demand for gallons of milk is normal with a weekly mean of 50 and standard deviation of 15. How many additional gallons of milk must be stocked to increase the service level from 50% to 80%?

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Z for 50% is 0, Z for 80% is ....

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In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.

A) True
B) False

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A disadvantage of the fixed-period inventory system is that


A) it involves higher ordering costs than the fixed quantity inventory system
B) additional inventory records are required
C) the average inventory level is decreased
D) since there is no count of inventory during the review period, a stockout is possible
E) orders usually are for larger quantities

F) A) and D)
G) B) and D)

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One function of inventory is to take advantage of quantity discounts.

A) True
B) False

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How sensitive is the EOQ to variations in demand or costs?

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The EOQ is relatively insensitive to sma...

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The fixed-period inventory model requires more safety stock than the fixed-quantity models because


A) a stockout can occur during the review period as well as during the lead time
B) this model is used for products that have large standard deviations of demand
C) this model is used for products that require very high service levels
D) replenishment is not instantaneous
E) setup costs and holding costs are large

F) A) and D)
G) A) and B)

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Demand for a product is approximately normal, averaging 5 units per day with a standard deviation of 1 unit per day. Lead time for this product is approximately normal, averaging 10 days with a standard deviation of 3 days. What reorder point provides a service level of 90 percent?

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This problem requires formula (12-17), s...

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The primary purpose of the basic economic order quantity model shown below is Q* = The primary purpose of the basic economic order quantity model shown below is Q* =   A)  to calculate the reorder point, so that replenishments take place at the proper time B)  to minimize the sum of carrying cost and holding cost C)  to maximize the customer service level D)  to minimize the sum of setup cost and holding cost E)  to calculate the optimum safety stock


A) to calculate the reorder point, so that replenishments take place at the proper time
B) to minimize the sum of carrying cost and holding cost
C) to maximize the customer service level
D) to minimize the sum of setup cost and holding cost
E) to calculate the optimum safety stock

F) B) and D)
G) B) and C)

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A newspaper boy is trying to perfect his business in order to maximize the money he can save for a new car. Paper sales are normally distributed, with a mean of 100 and standard deviation of 10. He sells papers for $.5 and pays $.30 for them. Unsold papers are trashed with no salvage value. How many papers should he order each day and what % of the time will he experience a stockout? Are there any drawbacks to the order size proposed and how could the boy address such issues?

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Service level = Cs/(Cs+Co) = .2/(.2+.3) ...

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In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger lot size than in an otherwise identical EOQ problem.

A) True
B) False

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A local artisan uses supplies purchased from an overseas supplier. The owner believes the assumptions of the EOQ model are met reasonably well. Minimization of inventory costs is her objective. Relevant data, from the files of the craft firm, are annual demand (D) =150 units, ordering cost (S) = $42 per order, and holding cost (H) = $4 per unit per year a. How many should she order at one time? b. How many times per year will she replenish her inventory of this material? c. What will be the total annual inventory costs associated with this material? d. If she discovered that the carrying cost had been overstated, and was in reality only $1 per unit per year, what is the corrected value of EOQ?

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a. Q* = blured image = 56.12. She should order 56 un...

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Perform an ABC analysis on the following set of products. Perform an ABC analysis on the following set of products.

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The table below details the contribution...

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Describe the difference between a fixed-quantity and a fixed-period inventory system?

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In a fixed-quantity inventory system, wh...

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One advantage of cycle counting is that it maintains accurate inventory records.

A) True
B) False

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Which of the following statements regarding Amazon.com is false?


A) The company was opened by Jeff Bezos in 1995.
B) The company was founded as, and still is, a "virtual retailer" with no inventory.
C) The company is now a world-class leader in warehouse management and automation.
D) The company uses both United Parcel Service and the U.S. Postal Service as shippers.
E) Amazon obtains its competitive advantage through inventory management.

F) A) and D)
G) A) and B)

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Daily demand for a product is normally distributed with a mean of 150 units and a standard deviation of 15 units. The firm currently uses a reorder point system, and seeks a 75% service level during the lead time of 6 days. a. What safety stock is appropriate for the firm? b. What is the reorder point?

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SS = 0.67 ∙ 15 ∙ blured image = ...

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Consider a local club selling Christmas trees. If demand is normal with a mean of 200 and a standard deviation of 50, how many trees should the club stock if service level must be greater than 95%?

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Z value for 95% serv...

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What are the main reasons that an organization has inventory?

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Reasons to carry inventory include decou...

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Which of the following statements about ABC analysis is false?


A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
B) In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers.
C) In ABC analysis, "C" Items have minimal records, periodic review, and simple controls.
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
E) All of the above statements are true.

F) B) and D)
G) None of the above

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__________ is a continuing reconciliation of inventory with inventory records.

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