solution

Suppose the company uses a periodic (P) inventory system, placing orders for every 30 days and using a target replenishment point of 1000 units. How much safety stock is being carried? Pick the closest answer.

A. 0

B. 200

C. 400

D. 600

E. 800

F. 1000

Suppose the company uses a periodic (P) inventory system, placing orders for every 30 days and carries 100 units in safety stock. What are the annual holding costs? Pick the closest answer.

A. 0

B. 1000

C. 5000

D. 10000

E. 20000

Suppose a company is using a P inventory system for a certain product, with a Target inventory position of 975 units. It is time to review its inventory and place an order. The manager counts a total of 25 units on the store shelves. It is also already scheduled to receive an order of 400 units. Customers have 100 units on backorder. How many units should be ordered?

A. 50

B. 250

C. 450

D. 650

E. 850

Suppose a manager estimates annual holding costs to be $12,000, and annual ordering costs to be $20,000. Assuming the manager’s situation meets the assumptions of the EOQ model, what can you say about the manager’s order quantity (Q)?

A. It is too big

B. It is too small

C. It is just right

D. Cannot tell from the information provided

Suppose a retailer currently orders a product from a distribution center in lots of 2800. The retailer’s average demand for the product is 400 units per week, and lead time from the distributor to the retailer is 5 weeks. The distributor has proposed that the retailer purchase quantities of 2000 per shipment instead; this will reduce the lead time down to 2 weeks.

Use this information to answer the next two questions.

By following to the distributor’s proposal, the retailer’s average cycle inventory will _____

A. decrease by 400 units

B. decrease by 200 units

C. stay the same

D. increase by 200 units

E. increase by 400 units

By following the distributor’s proposal, the retailer’s pipeline inventory will _______

A. decrease by 2000 units

B. decrease by 1200 units

C. decrease by 600 units

D. stay the same

E. increase by 600 units

F. increase by 1200 units