MGSC 395 Final Exam Questions With Correct Answers

inventory management - Answer the planning and controlling of inventories in order to meet the competitive priorities of the organization inventory - Answer a stock of materials used to satisfy customer demand or to support the production of services or goods pressures for small inventories - Answer -inventory holding cost -cost of capital -storage and handling costs -taxes -insurances -shrinkage pressure for large inventories - Answer - customer service -ordering cost -setup cost -labor and equipment ultilization -transportation cost -payment to suppliers types of inventory - Answer 1. raw materials 2. work in progress 3. finished goods 4. cycle inventory 5. safety stock 6. anticipation 7. pipeline lot sizing principles - Answer 1. the lot size, Q, varies directly with the elapsed time between orders (cycle) 2. the longer the time between orders, the greater cycle inventory must be cycle inventory - Answer -reduce the lot size -reduce ordering and setup costs and allow Q to be reduced -increase repeatability to eliminate the need for changeover safety stock inventory - Answer -place orders closer to the time when they must be received -improve demand forecasts -cut lead times -reduce supply chain uncertainty -rely more on equipment and labor buffers anticipation inventory - Answer -match demand with production rates -add new products w/ different demand cycles -provide off-season promotional campaigns -offer seasonal pricing plans pipleine inventory - Answer -reduce lead time -find more responsive suppliers and select new carriers -change Q in thoses cases where the lead time depends on the lot size ABC analysis - Answer the planning and controlling of inventories in order to meet the competitive priorities of the organization economic order quantity - Answer the lot size Q that minimizes total annual inventory holding and ordering costs five assumptions of economic order quantity - Answer 1. demand rate is constant and known 2. no constraints are placed on the size of each lot 3. the only 2 relevant costs are holding and fixed cost per lot for orderings or setup 4. decision for one item can be made independently of the other 5. the lead time is constant and known