Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 10, Problem 6CQ
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To determine: Whether the given statement is true or false.
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If two firms have the same annual inventory turns, they also have the same days-ofsupply. True or false?a. Trueb. False
The inventory turnover is calculated using the annual cost of goods sold and the aggregate inventory value on average. True or False?
Your firm uses a continuous review system and operates 52 weeks per year. One of the Stock-Keeping Units (SKUs) has the following characteristics:Demand = 20000 units/year = 385 units/weekOrdering cost = $40/orderHolding cost = $2/unit/yearService level = 95 percentz=1.65Lead time = 2 weeksDemand is normally distributed, with a standard deviation of weekly demand of 100 units.
a)Calculate the item's EOQ.
b)Find the safety stock and reorder point that provide a 95 percent service level.
c)For these policies, what are the annual costs of (i) holding the cycle inventory and (ii) placing orders?
Chapter 10 Solutions
Operations Management
Ch. 10 - It is costly to hold inventory, but inventory can...Ch. 10 - A delivery truck from a food wholesaler has just...Ch. 10 - Prob. 3CQCh. 10 - Prob. 4CQCh. 10 - Prob. 5CQCh. 10 - Prob. 6CQCh. 10 - Prob. 7CQCh. 10 - Prob. 8CQCh. 10 - Prob. 9CQCh. 10 - Prob. 10CQ
Ch. 10 - Prob. 11CQCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - An electronics manufacturer has 25 days-of-supply...Ch. 10 - Prob. 5PACh. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - An online shoe retailers annual cost of holding...Ch. 10 - Prob. 10PACh. 10 - Prob. 11PACh. 10 - Prob. 12PACh. 10 - Prob. 13PACh. 10 - Prob. 14PACh. 10 - Prob. 15PACh. 10 - Prob. 16PACh. 10 - A retailer has annual sales of 500,000 and an...Ch. 10 - Prob. 18PACh. 10 - Prob. 19PACh. 10 - Prob. 1CCh. 10 - Prob. 3CCh. 10 - Prob. 4C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- hello, can someone help me with this question?: if a company regularly holds 50 units of safety stock of a product and places orders in quantities of 500 units for the same product, what would be the average warehouse inventory for that product?arrow_forwardA firm has $5,000,000 of inventory on average and annual sales of $30,000,000. Assume there are 365 days per year. What is the firm’s inventory conversion period? * a. 60.83 days b. 45.00 days c. 30.25 days d. 55.25 days e. 72.44 daysarrow_forwardInventory shrinkage is the difference between inventory in the warehouse and inventory counted. True or false?arrow_forward
- If a company has a robust control on its inventory then it's inventory turnover is generally below industry average. Group of answer choices True Falsearrow_forwardWhich of the following is an element of inventory holding costs? All of these are elements of inventory holding costs. investment costs housing costs material handling costs pilferage, scrap, and obsolescencearrow_forwardA firm has P5,000,000 of inventory on average and annual sales of P30,000,000. Assume there are 365 days per year. What is the firm’s inventory conversion period?arrow_forward
- A supply falls into the _____________ ___________ category when the amount needed does not depend on another supply. In a _________ supply chain, where you create with the expectation that items will be sold, a modest buildup of inventory may not be such a bad thing.arrow_forwardIn a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. How much safety stock is required to maintain a 95% customer service level? What is the reorder point? Include the z-score you used to get this answer.arrow_forwardThe manager of the company told the employee to go out to the warehouse and count merchandise inventory. He said that owner is coming for a meeting next week and the manager wanted to put on a good show. He asked the employee to make the inventory higher by counting the first and last row twice. The higher ending inventory will result in higher net profit. What should the employee do?arrow_forward
- In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. How much safety stock is required to maintain a 95% customer service level? What is the reorder point? As a part of your answer, include the z-score you used to get this answer.arrow_forwardA company orders 250 units of a product each time the inventory drops below 175 units. If the average weekly demand is 75 units and the lead time for orders to be delivered is two weeks, how much inventory does the company hold on average? PLEASE SHOW CALCULATIONS/ EXCEL WITH FORMULASarrow_forwardIn an ABC system based on revenue, C items individually make the lowest annual revenue contribution. TRUE FALSEarrow_forward
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Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY