Foundations Of Inventory Management 1st Edition Paul H. Zipkin - Solutions

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The following data is available for the demand for an item:Week 1 2 3 4 5 Demand 10 20 5 10 15 What would you estimate to be the average quantity held in stock to meet the demand for this item, treating it as:(a) Independent demand (assuming that a 99.2 per cent customer service level is
The following ten items are the range of stock held in a small stores.Item no. Unit cost (£) Annual usage 1 150 2 2 125 100 3 85 4 50 5 40 6 26 7 20 8 10 9 7 300 10 6 20(a) Identify which are the A, B and C class items.(b) Discuss how ABC is used in purchase ordering.(c) Review another use of this
What are the advantages and disadvantages of keeping stock in retail stores rather than in supply depots?
Prepare a manufacturing schedule, using the DRP technique, for the following forecast demands and lot size replenishment quantities.Lot size Period demand 1 2 3 4 5 6 7 Current stock London 600 150 320 370 190 150 320 370 600 Manchester 250 70 70 70 70 70 70 70 230 Newcastle 400 90 150 150 90 90
(a) What different underlying assumptions are there between DRP and fair shares allocation of goods?(b) What is the fair shares priority logic for distributing stocks to regional warehouses?
A product is manufactured in two stages. The material for the process consists mainly of one basic, bought out ingredient. Expected sales of the product are as follows:Week 1 2 3 4 5 6 7 8 9 10 Sales 210 300 140 65 200 260 150 100 190 220 The stock situation is:raw material 500 semi-finished 220
A watch manufacturer has a schedule for assembly covering ten weeks.The schedule is:Watch X Manufacturing orders for 1000 watches due in weeks 2, 4, 6, 8 and 10.Assembly lead time per batch is 1 week.Watch Y Manufacturing orders for 500 watches due in weeks 3, 6 and 9.Assembly lead time per batch
What items of data (inputs) are required for the MRP calculation? For each, state the level and type of accuracy necessary to ensure reasonable results.
Weekly sales of a product are:Week Demand 1 12 2 14 3 8 4 16 5 13 6 18(a) Discuss what forecasting techniques can be used to determine the demand for the next week. Indicate which you would prefer to use and the reasons for your choice.(b) If the initial forecast for week 1 was ten, work out the
What is the difference between a target stock level system and a review level system?
Discuss ways in which stock can be reduced by suppliers and customers managing a supply chain together. What are the prerequisites for successful supply partnerships?
What factors determine the delivery quantity?
A company is proposing to schedule in supplies of twenty key items each week instead of ordering them monthly.(a) What preparatory work do they need to do with the suppliers?(b) If the purchase value of these items is £1 million per year, by how much will the average inventory be reduced?(c) What
(a) It has been remarked that ‘stock level for an item does not depend on its lead time’. Defend this remark using examples, and discuss why the statement is not precisely true.(b) Calculate the reorder level for the supply of umbrellas given the following data:Lead time = 2 months.Customer
A company is putting expensive fountain pens into boxes at a rate of about 250 per week, together with ink cartridges. The stock controller has decided that the pens they buy are class A, while the cartridges and boxes are class C. Suggest order and delivery patterns and order quantities for the
Explain why, for some A items, we can expect the review level to always be higher than the physical stock level?
The demand history of item XX1 is as follows:Week Demand The items are supplied weekly in boxes of 100. Work out:(a) the review level (reorder point)(b) the average stockholding.(You can assume a safety factor of 2 for 94 per cent customer service.)
What factors do you consider when setting stock levels for an independent demand item?
‘Re-ordering systems are not designed to stop you running out of stock.’Give two reasons why this statement can be justified.
ABC Distributors have the UK dealership for a well known manufacturer of pre-packaged confectionery. Their main activity is the supply of goods to the local retailers ex stock. At the recent stocktake, ABC Distributors had 1280 different stock lines with a total value of £40 000.They order all
The usage for two items over the past five weeks has been:Item Week 1 Week 2 Week 3 Week 4 Week 5 D523 60 30 20 40 50 K488 30 15 0 65 0(a) What are the values of average demand and variability for each?(b) The items cost 50p each and the lead time from the supplier is two weeks. The inventory
What are the three factors which determine safety stock?
Why is safety stock held?
The data below is the stock record for item 345.Date Receipts Unit cost Issues Balance 14/3 10 11 10 12/4 3 7 22/5 2 5 10/6 5 15 10 30/6 3 7 17/7 2 5(a) What is the value of the last issue (17/7) of item 345, based on:FIFO costing average costing LIFO costing.(b) If you needed to reduce the stock
‘JIT is a good theoretical idea but cannot work in our company’ said the production director. ‘We have customers who change their minds, a variety of processes, many products, and real people who cannot always be relied upon.’ Set out the arguments you would make to persuade this director
What is the role of safety stock, and why is it often not required in a JIT environment?
(a) What are the financial benefits to a company through setting up a linear flow kanban system?(b) A company is intending to set up a kanban system for production.Comment on the changes which will be required in:responsibility layout operator training quality management.
Your managing director has asked for a short report on ways of reducing work in progress and throughput time. At present, batch sizes are about fifteen, setups average three hours, processing time per unit is two minutes, and WIP stands at thirteen weeks. Create a short report outlining in simple
Do you believe that JIT simply passes the burden of holding stock on to the supplier?
Stock levels are as follows:A items: £28 000, 130 items B items: £6500, 350 items C items: £3500, 600 items Obsolete items: £2000, 200 items.Within the budget for next year, the estimated usage rate for each is:A items: £133 000 per month B items: £16 000 per month C items: £2000 per month
The statistics on the stock of a range of items is as follows:Item no. Unit cost (£) Annual usage 2A32 25.00 12 2B44 0.50 360 3D10 0.10 120 3E82 40.00 1 3F66 2.00 40 4G19 5.00 520 4H95 4.00 7 5J53 20.00 5 7N78 0.30 200 9P21 12.00 50 The stores controller is under pressure from the management to
A stores is offering ex stock delivery to a wide variety of customers. Item 35721 is a non-seasonal item which has the following usage characteristics:Weekly usage: 200.MAD: 50.Supply lead time: four weeks.(a) If deliveries are brought in every week, what is the target stock level if 85 per cent
If the current stock of the items in question 9 were as shown below:Item Stock quantity A901 6 B662 10 C355 50 D523 60 E191 50 F807 50 G010 12 H244 5 J459 20 K488 5(a) What is the stock cover for each of the items?(b) What would be the first task resulting from this analysis?(c) What is the stock
Which items in the following list are in the A, B and C classes? How do you determine this?Item code Weekly demand Unit price(£)A901 2 3.00 B662 2 8.00 C355 20 4.00 D523 40 0.50 E191 10 65.00 F807 1 9.00 G010 3 1.00 H244 1 170.00 J459 10 3.50 K488 22 0.50
How does a company give good customer service? A company is distributing a range of fast-moving items to stockists. The following is a list of dispatches for one day. What is their customer service level, assuming this to be a normal day?Order No 1A Quantity requested by customer Quantity
Discuss the ways in which the JIT approach differs from conventional inventory management.
What change in the return on capital (as a percentage) will there be when a company has reduced its stock value by £500 000, given the following data:Return on capital = Annual profit Total capital employed where capital employed = stock + capital plant sales turnover = £3 million profit = £400
The aim for Ace Distributors (in question 4) is to reduce the stock to£1.5 million. What will be the return on assets then?
Two companies distribute fast moving consumer goods. Their results for last year were:Annual accounts data Ace Distributors(£ million)Deuce Associates(£ million)Sales turnover 8 26 Fixed assets 2 5 Cost of sales 6.2 21 Stock value 4 8 You have been offered the job of inventory manager by both
‘More stock gives better availability.’ Challenge this conventional view.
Which departments put pressure on inventory managers, and what are their objectives?
What are the three key objectives of inventory control?
In allocating inventories to warehouses, the equal run-out method accomplishes the following:A. An equal supply at each location B. The accuracy of the cycle count C. Minimized inventory investment D. Maximum production efficiency
Which of the following statements describes a push system?I. A system of replenishing field warehouse inventories II. Uses decentralized decision making III. Is included in EOQ A. I only B. II and III C. All of the above
Which of the following statements best describes Distribution Requirements Planning?I. Uses TPOP II. Uses MRP Logic III. Is the same as CRP A. III only B. II and III C. I and II D. All of the above
Which of the following statements best describes Distribution Resource Planning?I. Same as Distribution Requirement Planning II. Uses TPOP III. In addition to product distribution, deals with facilities, people, trucks, etc.A. I and II B. III only C. II and III
List the types of Distribution Inventory Systems.
Which of the following areas are considered major types of warehouse processing costs?I. Receiving II. Picking III. Packaging IV. Shipping A. I only B. I and II C. II, III and IV D. All of the above
What are the two types of systems for locating parts?
List the major warehouse activities:
Which of the following best describes cycle counting?I. Inventory audit technique II. Used instead of a perpetual inventory III. Uses ABC analysis for determining items to be counted IV. The purpose is to find and correct errors A. I only B. I, II and III C. I, III and IV
Which of the following properly states the basic accounting equation?A. Assets=Liabilities+Stockholders’ Equity B. Beginning Inventory+Production-Shipments=Ending Inventory C. EOQ
An inventory valuation method that uses standard cost is I. LIFO II. FISH III. FIFO A. I and II B. All of the above C. None of the above
Inventory carrying costs include which of the following items?I. Cost of capital II. Taxes and insurance III. Obsolescence A. I and II B. II and III C. All of the above
What pieces of equipment are used for my product?
What is the physical process flow?
What is the information flow?
How many rework steps or operations are there at subcontractors or within the company’s operation?
How often do you revise the standard costs?
How many inspections are in the process?
What is the premium to pay as a result?
Do custom requirements cost your company or your suppliers more to process?
Are the processes standardized?
What are the plans for reducing costs at each level?
What is the bottleneck work center?
What is the capacity at each work center?
What is the cost driver for each assembly area? (Assuming Activity-Based Costing is being used)
What is the budgeted labor productivity improvement?
What value analysis is being performed to reduce the cost?
Are there common parts in this process? (If so, how many and at what levels are they located?)
What is the queue time between steps in the routing (assembly of this end item)?
Can costly processes be subcontracted; what are they?
As the learning curve improves, does the allocation change?
How do you make the overhead allocation?
What is the percentage of material cost in the BOM?
All of the following are included in stockout costs except A. Expediting cost B. Back orders C. Interest expense D. Freight premiums
Which of the following are included in storage costs?A. Utilities B. Warehouse/stockroom personnel C. Warehouse security D. All of the above
All of the following are types of lot-sizing techniques except A. Least unit cost B. Least cost C. Part period balancing D. EOQ
Using the following customer service level table, and assuming the standard deviation was 200 and MAD was 160, determine the inventory level of three positive deviations.A. 3 positive standard deviations equal 600 B. An inventory level of 200 equal a MAD factor of 1.25 C. One positive standard
MAD is A. Mean absolute deviation B. Not as precise as the standard deviation C. Easier to calculate than standard deviation D. All of the above
Calculate the standard deviation of the forecast error and mean absolute deviation (MAD). Complete the tables below with your calculations. A. Calculate the standard deviation forecast error. B. Calculate the mean absolute deviation (MAD).
Determine the following order quantities, based on dollars and units.
Time-phased order point uses the same logic as A. MRP B. Exponential smoothing C. EOQ D. Both A and B
The formula for calculating reorder point is A.B. DLT+S C. Safety stock+order quantity D. None of the above
Which of the following would be best suited to an independent demand system?A. Build-to-order products B. Service parts C. Parts used in end items
The use of reorder point systems is appropriate when A. There are many small orders.B. Lot sizes are fixed/known.C. Cost of stocking is high.D. All of the above
Which of the following systems would be best for determining the amount of component parts to be used in a product?A. Independent demand system B. MRP system C. Dependent demand system D. Both B and C
All of the following are major types of manufacturing environments EXCEPT:A. Build-to-order B. Build-to-stock C. Assemble-to-order D. Assemble-to-build
List three major types of inventory.a._________ b._____-c.__________-
List the four objectives of inventory management.a.________ b.______--c.______ d.________-
Applies to inventory buildups before a seasonal busy period or planned shutdown.
This inventory may be established because of pending labor strikes.
This inventory separates the operations so work centers can produce independently from each other, which prevents idle time.
This is part of the inventoryf. hedging stock that is actively used to build products. g. cycle stock
Time inventory spends ind. transportation inventory the “pipeline” that has an impact on the inventory levels, including time spente. maintenance, repair and on order entry, shipping, operating supplies (MRO)transportation and receiving.
Inventory that is carried to buffer against fluctuations in forecast sales.c. safety stock
These inventories includea. decoupling inventory janitorial supplies and services.b. anticipation inventory
Consider the two-stage series system of Section 9.8, specifically, the myopic policy constructed in Section 9.8.2. Prove that s](t) ss;(t). [This is easy forj ~ 2; just follow the proof ofTheorem 9.4.2(u). Likewise, letting sJ(t) minimize cf(t,y) = 'YcJCt + I)E[d(t)] + c~(t)y + Cj(t,y)argue that
Consider the series system of Section 9.8. Justify the dynamics describing the echelon-inventory measures x;(t) and x/t) in Section 9.8.1. Also, demonstrate that the echelon-based inventory backorder cost hj(t)xj(t) +C2(t. x2(t)) is equivalent to the original cost (9.8.2).
Considerthe world-driven-demand model of Section 9.7.2 with linear order costs crt, w) that depend on the current world state. Show how to compute c +(t, w) and C+ (t, W, y). That is, set things up so that we can rewrite the dynamic program (9.7.1) to (9.7.3) in a form analogous to(9.4.6) to

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