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1. You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item: A normal distribution table is shown below. Use the information in Table 12.4. What is the economic order quantity for this item? You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item: A normal distribution table is shown below. Use the information in Table 12.4. What is the length of their order cycle if they order the economic order quantity each time? 2. You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item: A normal distribution table is shown below. Use the information in Table 12.4. What is the reorder point for this item if they use a 95% service level? 3. You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item: A normal distribution table is shown below. 4. Use the information in Table 12.4. If this form uses an EOQ model for purchase decisions, which change would result in the biggest increase in order quantity over the amount required by the original data? Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item: A normal distribution table is shown below. Use the information in Table 12.5. What is the EOQ for this item? 4. Cynthia Korinsky, manager of a large medical supply house that operates 50 weeks per year and five days per week, has decided to implement a periodic review system for all class A items. One such item has the following characteristics: Demand = 10,000 units per year (or 40 units per workday) Order cost = $50 per order Holding cost = $5 per unit per year If Korinsky wishes to minimize total cost (thereby approximating the EOQ), what should be P, the number of workdays between orders? 5. Use the information in Table 12.6. The firm decided to change to the periodic review system to control the item's inventory. For the most recent review, an inventory clerk checked the inventory of this item and found 500 units. There were no scheduled receipts at the time. How many units should be ordered? (HINT: Use the EOQ model to derive P, the time between reviews.) 6. A normal distribution table is shown below. Use the information in Table 12.7. A firm uses the periodic review system to control the item depicted above. It reviews the item's status every three weeks (P = 3). At the most recent inventory review, an inventory clerk found 1,500 units. There were no scheduled receipts and no backorders. How many units should be ordered? (Hint: You must calculate T before answering this question.) 7. A normal distribution table is shown below. Use the information in Table 12.7. What is the EOQ for this item? Answer Between 1 and 1,500 units Between 1,501 and 3,000 units Between 3,001 and 4,500 units Greater than 4,500 units Jerry Allison is in charge of production for a small producer of plumbing supplies. The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day. The company produces (and sells) the cricket 300 days per year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. Use the information in Scenario D.1. What is the economic production lot size (ELS)? Answer Fewer than or equal to 400 units Greater than 400 units but fewer than or equal to 480 units Greater than 480 units but fewer than or equal to 500 units Greater than 500 units Jerry Allison is in charge of production for a small producer of plumbing supplies. The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day. The company produces (and sells) the cricket 300 days per year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. Use the information in Scenario D.1. If Jerry chooses to produce batches dictated by the economic production lot size (ELS) model, how many days elapse between the start of consecutive production runs (what is the time between runs or TBO)? Answer Fewer than or equal to 8 days Greater than 8 days but fewer than or equal to 10 days Greater than 10 days but fewer than or equal to 12 days Greater than 12 days Jerry Allison is in charge of production for a small producer of plumbing supplies. The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day. The company produces (and sells) the cricket 300 days per year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. Use the information in Scenario D.1. If Jerry chooses to produce the batch size suggested by the economic production lot size (ELS) model, what is the annual cost? Answer Less than or equal to $900 Greater than $900 but less than or equal to $950 Greater than $950 but less than or equal to $1000 Greater than $1000 In a noninstantaneous replenishment model, as the daily demand approaches the daily production rate: Answer the number of production runs per year decreases. the length in days of a production run increases. the economic lot size increases. the time between production runs decreases. Which one of the following statements about quantity discounts is best? Answer The minimum cost point on each price curve is always feasible. A price break is the maximum quantity needed to get a discount. If the EOQ for the lowest price is feasible, this is the best lot size. Either price or quantity is sufficient for the search for the best lot size. Kyle store sells K2 skis. The store makes a $200 profit per unit sold during the ski season, but it should take a $50 loss per unit if sold after the season is over. The following discrete probability distribution has been estimated for the season's demand. Use the information in Scenario D.2. What is the payoff with an order quantity (Q) of 40 units if the demand (D) is 30 units? Answer Less than or equal to $2,000 Greater than $2,000 but less than or equal to $4,000 Greater than $4,000 but less than or equal to $6,000 Greater than $6,000 Consider an item with the following discrete demand distribution for a one-time inventory decision. This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if sold after the season is over. Use the information in Scenario D.3. What is the payoff when 40 units are ordered but a demand of 50 materializes? Answer $150 $300 $450 $600 Consider an item with the following discrete demand distribution for a one-time inventory decision. This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if sold after the season is over. Use the information in Scenario D.3. What is the order quantity with the highest expected payoff? Answer 20 units 30 units 40 units 50 units Which of these statements about the one-period model is best? Answer Purchasing a quantity with the highest expected payoff will result in a positive payoff regardless of demand during the period. The loss per unit cannot exceed the profit per unit. If demand exceeds the purchased quantity then the payoff exceeds the expected payoff. The expected payoff is always less than the actual payoff. Consider a noninstantaneous replenishment situation in which the production rate is 100 units per day, the demand rate is four units per day, and the economic production lot size is 500 units. Which of the following statements is true? Answer The average cycle inventory is fewer than 225 units. The average cycle inventory is greater than 300 units. The rate of buildup in cycle inventory during the production cycle is fewer than 100 units per day. The rate of buildup in cycle inventory during the production cycle is greater than or equal to 400 units per day.