Question 1

What are the assumptions of the EOQ model?

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Question 2

What are the main reasons that an organization has inventory?

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Question 3

Explain what "decoupling" means in the context of inventory management.

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Question 4

What are the techniques to control service inventories?

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Question 5

When is a good time for cycle-counting personnel to audit a particular item?

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Question 6

List the typical components that constitute inventory holding or carrying costs.

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Question 7

What is cycle counting?

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Question 8

Define service level.

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Question 9

Describe the costs associated with ordering and maintaining inventory.

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Question 10

Define shrinkage. List three or more examples of shrinkage.

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Question 11

Compare the assumptions of the production order quantity model to those of the basic EOQ model.

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Question 12

Several inventory models assume "independent demand." Explain what that term means and why the assumption is important.

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Question 13

What is a reorder point?

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Question 14

List the four types of inventory.

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Question 15

In some inventory models, the optimal behaviour occurs where ordering costs and carrying costs are equal to one another. Provide an example of a model where this "rule" does not hold; explain how the model's results are optimal anyway.

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Question 16

Assume two inventory problems with identical demand, holding cost, and setup cost. In one, goods arrive instantly, but in the other goods arrive at a measurable rate. Which of these problems will have the larger optimal order quantity? Why?

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Question 17

What is MRO an acronym for? What is the function of MRO inventories?

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Question 18

Describe ABC inventory analysis in one sentence. What are some policies that may be based upon the results of an ABC analysis?

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Question 19

In the basic economic order quantity model and in the production order quantity model, optimal behaviour occurs where annual setup costs equal annual holding costs. Is this a coincidence, or a fundamental element of these models? Answer in a well-constructed paragraph.

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Question 20

List the typical cost components that constitute ordering costs in inventory systems.

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Quiz 12: Inventory Management