Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 8, Problem 8CQ
Summary Introduction
To identify: The impact on the inventory turns.
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A retailer currently places orders with its suppliers on a weekly basis. It is considering a switch to a routine in which it places orders on a daily basis. No change is expectedin the retailer’s demand. This change will have what effect on the volatility of its orders?a. It will decrease because its orders will better match its demand.b. It will stay the same because the retailer’s demand remains the same.c. It will increase because the more frequent orders will lead to more fickle decisions
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Taylor Supply is a wholesaler of office supplies and equipment. Taylor purchases cartons of staples from Barker Manufacturing. Barker offers a price of $7 per carton of staples. Taylor incurs a fixed charge of $90 per order to cover order equipment and clerical costs. Each order takes 3 days to arrive . Taylor has projected sales to be 603 boxes per day. Taylor's accounting department has determined the holding costs relevant for inventory decisions are 28% of unit cost. Assume Q=3000. What is the demand for staples during lead time?
1) Assume Q=3000. What is the demand for staples during lead time?
2) Assume Q=3000. What z value is associated with a 90% confidence level?
3) Assume Q=3000. If Taylor wants a 90% service level, and the standard deviation in daily demand is 250, what is the appropriate reorder point?
4) Assume Q=3000. If Taylor wants to improve their service level to 95%, and…
Which of the following statements about the just-in-time (JIT) system is true?
a. When using the JIT system, a firm should protect itself against uncertainty by
maintaining a reserve inventory at production and stocking points.
b. The JIT system is used in situations where demand and forecasting are
reliable.
c. The JIT system is used in situations where inventory will be stored over
significant periods of time.
d. The JIT system raises inventory costs.
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Chapter 8 Solutions
Operations Management
Ch. 8 - Prob. 1CQCh. 8 - Prob. 2CQCh. 8 - Prob. 3CQCh. 8 - Prob. 4CQCh. 8 - Prob. 5CQCh. 8 - Prob. 6CQCh. 8 - Prob. 7CQCh. 8 - Prob. 8CQCh. 8 - What are the two pillars of the Toyota Production...Ch. 8 - Prob. 10CQ
Ch. 8 - Prob. 11CQCh. 8 - Prob. 12CQCh. 8 - Prob. 13CQCh. 8 - Prob. 14CQCh. 8 - Prob. 15CQCh. 8 - Prob. 16CQCh. 8 - Prob. 17CQCh. 8 - Prob. 18CQCh. 8 - Prob. 19CQCh. 8 - A company makes two models, A and B. Which of the...Ch. 8 - Prob. 21CQCh. 8 - Prob. 22CQCh. 8 - Prob. 23CQCh. 8 - Prob. 24CQCh. 8 - Prob. 25CQCh. 8 - Prob. 26CQCh. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
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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
- A company is increasing the percentage value-added time in the operation. Its value-addedtime and its flow rate remain unchanged. What will happen to its inventory turns? (Recallfrom Chapter 2 that inventory turns are computed as flow rate divided by inventory.)a. Inventory turns will go up.b. Inventory turns will stay constant.c. Inventory turns will go down.d. Cannot determine from the given informationarrow_forwardWhich of the following is the correct equation for calculating net purchases? a. Purchases + return outwards- purchase discounts O b. Purchases - return inwards- purchase discounts O c. Purchases- return inwards + purchase discounts O d. Purchases - return outwards - purchase discountsarrow_forwardSelect the best answer. a. Servicces are produced and consumed nearly simultaneously. b. It is nott possible to inventory service outputs. c. Servicess are delivered when customers are in close proximity to the service provider. d. All of the abovve (i.e., choices a, b and c are always true). e. Each of the chooices a, b and c is "sometimes" true and "sometimes" false.arrow_forward
- “As soon as the customer places an Order, it is received by the Sales department and a Sales Order is created. The Sales Order is sent to the Finance Department to check if the customer has any outstanding balance for more than 60 days. The AR Clerk at the Finance Department checks and sends the results back to the Sales Department. If there is an outstanding balance for more than 60 days, the Sales Department puts the Order on hold and notifies the customer. Otherwise, the Order Entry Clerk creates an Order Confirmation and sends it to the customer. Simultaneously a Picking List is generated and sent to the Order Fulfilment Department who picks up the next set of process steps. The Order Fulfilment Department receives the Picking List and determines which Warehouse is closest to the Customer location. The Picking List is sent to that Warehouse location. There, the items from the Picking List are picked. An Invoice is generated and printed. The items are packed along with the printed…arrow_forwardA company had an average inventory last year of $203,000 and its inventory turnover was 6. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year?arrow_forwardThe definition of work-in-process (WIP) inventory is: Select one: a. An end item ready to be sold, but still an asset on the company's books. b. Products or components that are no longer raw materials but have not yet become finished products. c. Materials for maintenance, repair and operation. d. Materials that are normally purchased but have not yet entered the manufacturing process. and. Additional stock to allow for uneven demand; a buffer.arrow_forward
- From the following; refers the term "Inventory" O a. Materials in stock O b. Forecast value of a product O C. Actual demand of a product o d. Difference between actual value and demand voaluearrow_forwardCompany XYZ is strictly a service company and does not carry any inventory on its balance sheet. Based on this, which of the ratios below will be of no interest to a financial analyst? Quick Ratio Current Ratio Debt to Equity Ratio Cash Coverage Ratioarrow_forwardA convenience store uses the fixed-period inventory control system (FPS) to manage its inventory of distilled water bottles. This system relies on the following information. (a)Using EOQ (rounded up), what is the time interval between reviews T in operating days? Note that after having the rounded-up EOQ, you should not round up values at intermediate steps; and, you should round T up only after the last calculation. (For example: enter 10 for 10 days.) (b) What is the current inventory position (IP) in bottles? (For example: enter 70 for 70 bottles) (c)Without safety stock, what is the replenishment level without safety stock M(AD) in bottles? Note that the question does not ask for M(ST). (For example: enter 70 for 70 bottles) (d)If today is the review day and without safety stock, what is the order quantity in bottles given M(AD)? (For example: enter 70 for 70 bottles)arrow_forward
- If the cost of goods manufactured is higher than the cost of goods sold, which of the following is correct? A. Finished Goods Inventory has decreased. B. Work in Process Inventory has decreased C. Finished Goods Inventory has increased. D. Work in Process Inventory has increased.arrow_forwardThe manager of inventory would most likely be found in the __________. a. manufacturing function. b. finance function. c. marketing function. d. information system function.arrow_forwardIt is costly to hold inventory, but inventory can also be useful in a process because:a. adding inventory to a process will shorten the average time a unit spends in a process.b. adding inventory to a process can help reduce situations in which sales are lost due touncertain demand.c. adding inventory to a process is likely to increase quality.d. adding inventory to a process will increase the profit margin of the item.arrow_forward
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