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Exam 6: Waiting Lines

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Question 21

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Which one of the following statements represents an advantage of the P system over the Q system?

A) Less safety stock is carried to achieve the same service level.
B) Orders can be more easily combined to the same supplier.
C) A P system is more suitable for quantity discounts and capacity limitations.
D) The replenishment intervals can be more easily individualized for items.

E) B) and C)
F) A) and B)

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Question 22

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______ is the time interval for which inventory must be planned when each new order is placed.

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Question 23

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Holding inventory towards the finished goods level supports lower costs but also results in longer delivery times.

Demand for an item is 1000 units per week, with a standard deviation in weekly demand of 60 units. The lead time is 2 weeks. The company wants to maintain an 88 percent cycle- service level. Assume demand during lead time to be normally distributed. For a continuous review system, what should be the reorder point? A normal table is attached at the end of this exam.

The two- bin inventory system is a type of visual system.

A(n) ______ is a system that allows employees to place orders when inventory visibly reaches a certain marker.

For a continuous review (Q) inventory system, with uncertain demand a company is only at risk of running out of stock over the lead time (L) required to receive an order.

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decision for any other item held in stock.

Table $5.2$ Consider the following data for an independent demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop: -Use the information in Table 5.2. If Crittenden uses the EOQ model, how frequently must she place orders for this item?

The primary lever for reducing ______ inventory is to reduce predictable variation. Secondary levers emphasize better coordination and adjusting the output rate of individual operations.

A neighborhood sportswear store sells a pair of Nike sneakers for $40. Due to the recent fitness craze, these shoes are in high demand: 50 pairs of shoes are sold per week. The ordering cost is $20/order, and the annual holding cost is 20 percent of selling price. If the store operates 52 weeks a year, what can you say about the current lot size of 235?

A stockout is a customer order that cannot be filled when promised or demanded but is filled later.

The Lemma Company manufactures and sells 10 products. Ways have been found to cut both the setup and inventory holding costs in half. What effect will this have on the economic order quantities of the 10 products?

For an item under continuous review, the on- hand inventory is only 20 units and the reorder point R is 100 units. There are no backorders, but there is one open order for 90 units. Which one of the following statements is TRUE?

______ is the cost involved in changing over a machine to produce a different component or item.

______ systems are systems in which an item's inventory position is reviewed periodically rather than continuously.

As the setup cost (S) increases, the economic order quantity (EOQ) decreases.

For continuous review (Q) inventory systems, fixed quantities of items are ordered each time inventory levels reach the reorder point (R).

What are the secondary levers for anticipation inventory?

For a continuous review (Q) inventory system, with uncertain demand the time between orders (TBO) is the same for each cycle.