Show CHAPTER 2 2.1 If the opening inventory is 400 units, demand is 900 units, and production is 700 units, what will be the ending inventory? Ending inventory = opening inventory + production – demand = 400 + 700 – 900 = 200 units 2.2. A company wants to produce 500 units over the next 3 months at a uniform rate. The months have 19, 20, and 21 working days, respective! On the average, how much should the company produce each day to level production? Total Production = 500 units Total working days = 19 + 20 + 21 = 60 days Average daily production = 500 / 60 = 8.33 Answer. Average daily production = 8.3 units 2.3. A company plans to produce 25,000 units in a 3-month period. The months have 22, 21, and 20 working days respectively. What should the average daily production be? Total Production; = 25,000 units Total working days = 22 + 21 + 20 = 63 days Average daily production = 25,000 / 63 = 396.8 units 2.4. In problem 2.2, how much will be produced in each of 3 Months? Month 1 = working days * production / day = 19 days * 8.33 units = 158 Month 2 = 20 days * 8.33 units = 166 Month 3 = 21 days * 8.33 units = 174 2.5. In problem 2.3, how much will be produced in each of the 3 months? Month 1 = working days * production / day = 22 days * 396.8 units = 8729.6 units Month 2 = 21 days * 396.8 units = 8332.8 units Month 3 = 20 days * 396.8 units = 7936 units 2.6. A production line is to run at 1000 units per month. Sales are forecast as shown in the following. Calculate the expected period-end inventory. The opening inventory is 600 units. All periods have the same number of working days. Operations Management, 11e (Krajewski et al.) Chapter 9: Inventory Management 9.1 Inventory Trade-Offs 1) A quantity discount is attractive because there is a drop in the price per unit when the order is sufficiently large. Answer: TRUE 2) Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization. Answer: TRUE 3) When looking at inventory management, the term "lot size" refers to the physical dimensions of the area where the inventory is stored. Answer: FALSE 4) When looking at inventory management, the term "lot size" refers to the quantity of an inventory item management either buys from a supplier or manufactures using internal processes. Answer: TRUE 5) The primary reason for keeping inventories low is that inventory represents a temporary monetary investment. Answer: TRUE 6) One component of the holding cost of inventory is interest. Answer: TRUE 7) One component of the ordering cost of inventory is shrinkage. Answer: FALSE 8) A stock-out occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs. Answer: TRUE 9) A backorder occurs when a customer order cannot be filled when it is placed, but is instead filled later. Answer: TRUE 10) Setup cost is independent of order size. Answer: TRUE 11) Reducing setup costs will increase the pressure to keep large inventories. Answer: FALSE 12) Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs. Answer: TRUE Which one is in largest of all inventory costs?Capital costs are the largest component of inventory carrying costs. They include everything related to the investment in buying stock. This includes the money spent procuring the goods, the interest lost when working capital is turned into stock and the opportunity cost of the money invested.
When to order can be calculated by the top and expressed as a quantity?When to order can be calculated by the ROP and expressed as a quantity. The rate of demand is an important factor in determining the ROP. The inventory value of the supply chain exceeds the inventory value of the organization's work in process inventory. Safety stock is held because we anticipate future demand.
Which one of the following is implied by a lead time service level of 95 percent?Which one of the following is implied by a "lead time" service level of 95 percent? The probability is 95 percent that demand during lead time will not exceed the amount on hand at the beginning of lead time.
Which assumption is not part of the basic EOQ model?∴ So, stochastic demand is not an underlying assumption of the basic EOQ model.
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