Omgt Chpt. 11

Introduction to Operations and Supply Chain Management, 3e (Bozarth/Handfield)

Boardman

Chapter 11 Managing Inventory throughout the Supply Chain

1. Cycle stock can occur at more than one point in a supply chain.

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2. Companies do not plan to use safety stock.

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3. Dependent demand inventory never needs hedge inventory.

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4. The order quantity in a periodic review system rises as the on-hand inventory falls.

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5. The reorder point increases as the service level falls.

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6. A company that orders at their economic order quantity has an annual ordering cost that is half of their total cost.

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7. In order for the economic order quantity model to work, demand must be known and constant.

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8. Decreases in the standard deviation of demand reduce the amount of safety stock that should be held.

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9. In order to find the lowest cost ordering policy in a quantity discount model, you must compare the holding cost, ordering cost, and the cost of goods for various order quantities.

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10. The excess cost of an item is the profit you would have made on it.

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11. A target service level is the point where the expected cost of a shortage equals the expected cost of having excess units.

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12. Buying advance tickets for the Giraffe Massacre concert on New Year's Eve saves the buyer one-tenth of one percent on the face value of the tickets. It would be wise to buy tickets well in advance of the concert date.

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13. As the average demand rises, the standard deviation of demand falls.

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14. The bullwhip effect says that a small change in demand downstream in the supply chain causes a large change in demand upstream.

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15. The flexibility of inventory increases as materials move down the supply chain.

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16. The value...