WGU C801 XTM1 TASK 2 COMPREHENSIVE
TASK PAPER QUESTIONS AND SOLUTIONS
◉ Chase Demand.
Answer: Demand that occurs when a company has to adjust
production by rates to match demand by varying the workforce and
using overtime. Companies vary the workforce by adding or
reducing the number of employees on duty at any given time. And
they may choose to provide overtime by asking workers to stay on
the job beyond their normally scheduled time.
◉ Safety Stock.
Answer: A cushion of inventory to protect against unexpected
demand. In this way, they can continue to meet customer demand
without delays.
◉ Stock Out.
Answer: Occurs when inventory is depleted.
◉ Perpetual Inventory System.
Answer: Continuously monitors inventory levels and is also called a
continuous review system. Requires human input (i.e. cashier) and
the ordering of more inventory is triggered by reorder point.
,o Requires an exact inventory balance at all times
o Best for big businesses, retail stores, or banks
o High value and high volume
o Expensive to implement and maintain
◉ Periodic Inventory System.
Answer: Randomly monitors inventory levels and is also called the
fixed order interval system.
o Requires a physical count periodically
o Used when a supplier will only deliver at specific time intervals
o Low value and volume
o Used for small businesses
o Inexpensive to implement and maintain
◉ ABC analysis.
Answer: Has been developed to determine which inventory items
should receive the highest level of control. By multiplying the dollar
value of each item by its annual usage, a dollar usage value can be
obtained. Dollar usage follows the Pareto Principle in that
frequently, only 20% of all the items account for 80% of the total
dollar usage, while the remaining items frequently account for only
20% of the dollar usage. This principle leads to the _____
,classification, which is based on focusing efforts where the payoff is
highest
◉ Pareto Principle.
Answer: Only 20% of all the items account for 80% of the total dollar
usage, while the remaining items frequently account for only 20% of
the dollar usage. This principle leads to the ABC classification, which
is based on focusing efforts where the payoff is highest
◉ Economic Order Quantity (EOQ).
Answer: For inventory that doesn't require production, when
demand is constant and known, when cost per unit does not depend
on order quantity.
Most appropriate for retail stores or companies that order finished
goods.
◉ Economic Production Quantity (EPQ).
Answer: For inventory that will be used in production, When
incremental ordering and depletion of inventory is allowed, Also
called production order quantity.
Most appropriate for manufacturing and production companies
, ◉ The goal of firms using the EOQ & EPQ model.
Answer: Minimize the total annual costs of ordering and holding
inventory by varying the order quantity.
◉ Quantity discount model.
Answer: A discount offered in price for ordering above a specified
amount
◉ Transportation discounts.
Answer: A discount offered on shipping cost for ordering above a
specified amount
◉ Revenue Sharing.
Answer: When 2 or more companies partner and divides the profits
received based on an agreement between all parties involved.
◉ Reserve Capacity.
Answer: When a company stores, or pays another company to store,
excess inventory to be used for unexpected demand
◉ Quality.
Answer: the degree to which a specific product conforms to its
design characteristics or specifications
TASK PAPER QUESTIONS AND SOLUTIONS
◉ Chase Demand.
Answer: Demand that occurs when a company has to adjust
production by rates to match demand by varying the workforce and
using overtime. Companies vary the workforce by adding or
reducing the number of employees on duty at any given time. And
they may choose to provide overtime by asking workers to stay on
the job beyond their normally scheduled time.
◉ Safety Stock.
Answer: A cushion of inventory to protect against unexpected
demand. In this way, they can continue to meet customer demand
without delays.
◉ Stock Out.
Answer: Occurs when inventory is depleted.
◉ Perpetual Inventory System.
Answer: Continuously monitors inventory levels and is also called a
continuous review system. Requires human input (i.e. cashier) and
the ordering of more inventory is triggered by reorder point.
,o Requires an exact inventory balance at all times
o Best for big businesses, retail stores, or banks
o High value and high volume
o Expensive to implement and maintain
◉ Periodic Inventory System.
Answer: Randomly monitors inventory levels and is also called the
fixed order interval system.
o Requires a physical count periodically
o Used when a supplier will only deliver at specific time intervals
o Low value and volume
o Used for small businesses
o Inexpensive to implement and maintain
◉ ABC analysis.
Answer: Has been developed to determine which inventory items
should receive the highest level of control. By multiplying the dollar
value of each item by its annual usage, a dollar usage value can be
obtained. Dollar usage follows the Pareto Principle in that
frequently, only 20% of all the items account for 80% of the total
dollar usage, while the remaining items frequently account for only
20% of the dollar usage. This principle leads to the _____
,classification, which is based on focusing efforts where the payoff is
highest
◉ Pareto Principle.
Answer: Only 20% of all the items account for 80% of the total dollar
usage, while the remaining items frequently account for only 20% of
the dollar usage. This principle leads to the ABC classification, which
is based on focusing efforts where the payoff is highest
◉ Economic Order Quantity (EOQ).
Answer: For inventory that doesn't require production, when
demand is constant and known, when cost per unit does not depend
on order quantity.
Most appropriate for retail stores or companies that order finished
goods.
◉ Economic Production Quantity (EPQ).
Answer: For inventory that will be used in production, When
incremental ordering and depletion of inventory is allowed, Also
called production order quantity.
Most appropriate for manufacturing and production companies
, ◉ The goal of firms using the EOQ & EPQ model.
Answer: Minimize the total annual costs of ordering and holding
inventory by varying the order quantity.
◉ Quantity discount model.
Answer: A discount offered in price for ordering above a specified
amount
◉ Transportation discounts.
Answer: A discount offered on shipping cost for ordering above a
specified amount
◉ Revenue Sharing.
Answer: When 2 or more companies partner and divides the profits
received based on an agreement between all parties involved.
◉ Reserve Capacity.
Answer: When a company stores, or pays another company to store,
excess inventory to be used for unexpected demand
◉ Quality.
Answer: the degree to which a specific product conforms to its
design characteristics or specifications
