The minimum amount of inventory necessary to maintain a process throughput The probability that there will be no stockout within an order cycle E The buffer inventory used to decouple the process from its environment 3. According to our text, safety inventory (stock) is best described as: A Half the order size The inventory in excess of the average or in excess of forecast demand C The minimum amount of inventory necessary to maintain a process throughput D The average inventory due to a batch activity E The buffer inventory used to decouple the process from its environment 4. Why do companies care so much about the efficient management of inventory? a. They want to have product available for customers when they want them b. There is a significant amount of capital tied to inventory c. Efficient management gives the opportunity to streamline inventory in order to save money d. All of these are potential reasons 5. In general, the Economic Order Quantity (EOC) is? a. The lot size the minimizes total costs b. The amount that is ordered when you place an order in a Q-type inventory system c. The quantity that balances ordering and holding costs d. All of these correct interpretations A l AaBbc Emphasis Heading 1 T Normal Strong Subtitle Paragraph Styles 6. When comparing a Q and a P inventory system, what can be concluded? a The P system requires extensive information systems in order to work effectively b. The system has a lower total cost associated with continuous inventory management c. The Q system is based on EOQ, but the system is not d. Both systems require extensive knowledge accounting principles SCENARIO1 - MERCHANDISING POLICY FOR LL BEAN: Suppose you purchase a $4-per-unit part from a supplier with which you assemble red widgets. On average, you use 50,000 units of this part each year. The recommended selling price of the product is $5-per-unit. Every time you order this particular part, you incur a sizable ordering cost of $800 regardless of the number of parts that you order. Your cost of capital is 20% per year. A) How many parts should you purchase each time you place an order? B) If the lead time is 4 weeks, what is the re-order point (ROP) - assume no safety stock is used? C) If the standard deviation of the weekly demand forecast is 50 and you want to guarantee a 90% in-stock level, what is the ROP with Safety Stock? SCENARIO2 - ABC Company: ABC Company supplies ink cartridges for printers on the aftermarket (.e. they sell replacement cartridges). The demand for the cartridge is 400 units per week with a standard deviation of demand of 75 units per week. The holding cost of the cartridge is $5/unit/year while the ordering cost is $100/order. The company works for 50 weeks per year at 5 days per week. The desired service level for this part is 99%, it takes 5 days to get it from the supplier. The company is investigating the possibility of implementing a continuous review (EOQ) inventory system Based on this information... What is the safety stock (just safety stock) required to achieve the desired service level? Display Settings Focus Fill out the MRP record below and state your decisions. A (n)-number of children needed per parent Gross requirements of child - Planned Order Release of Parent xa Safety Stock (55) for all levels is 0 9 10 3 4 5 6 7 8 X(1) Z (4) LTA-1 wk, Scheduled Receipts (SR) L4L - Lot-for-Lot A: QALAL 1 2 Gross Req 50 Scheduled Receipt On Hand 50 Net Requirements 10 10 50 105 80 25 Planned order receipts Planned Order Releases LT 2.850 1 8 2 X:00L4L Gross Requirements Scheduled Receipt On Hand 0 Net Requirements Planned order receipts Planned Order Releases 1 2 LT-SS-0 3 5 7:00. LAL Gross Requirements Scheduled Receipt On Hand 300 Net Requirements Planned order receipts Planned Order Releases Please state your decisions after filling out the record above. Plan to release an order of Product X in week etc