For an inventory item, suppose the demand is 210/week, the order frequency is 10

Question

For an inventory item, suppose the demand is 210/week, the order frequency is 10/year, lead time is 1.3 weeks, and safety stock is 7.

Question 2. Find the inventory policy for a continuous review system.

(A) ( 1.2 months , 1092 )

(B) ( 273 , 21 )

(C) ( 0.4 weeks , 21 )

(D) ( 280 , 1092 )

(E) none of the above

Question 3. Find the inventory policy for a periodic review system.

(A) ( 1.2 months , 1092 )

(B) ( 273 , 21 )

(C) ( 0.4 weeks , 21 )

(D) ( 280 , 1092 )

(E) none of the above

Question 4. How many of the statements are true?

(A) 0 (B) 1 (C) 2 (D) 3 (E) 4

Statement 1. The order frequency is 5/quarter.

Statement 2. The inventory turnover is 910/week

Statement 3. The inventory turnover rate is 40/year

Statement 4. The inventory period is 0.4 weeks

Question 5. How many statements are true?

(A) 0 (B) 1 (C) 2 (D) 3 (E) 4

Statement 1. The stockout level increases as the safety stock increases.

Statement 2. The turnover rate increases as the lot size increases.

Statement 3. The inventory period increases as the order frequency increases.

Statement 4. The lot size increases as the inventory period increases.

Explanation / Answer

2) Ans.: (D) (280,1092) Weekly demand 210 units/week no of orders per year 10 orders Lead Time 1.3 weeks Safety Stock 7 units Demand during Lead time 273 units Reorder Point = demnad during lead time + safety stock Reorder Point = 280 units Annual Demand = Weekly demand * 52(no of weeks in a year) Annual Demand = 10920 units no of orders per year 10 orders Quanity per order = 1092 units (=annual demand/ no of orders per year)

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