An appropriate technique for planning and controlling manufacturing inventories, such as raw materials, components, and subassemblies whose demand depends on the level of production is
Answer(s): A
Materials requirements planning MRP) is a system that translates a production schedule into requirements for each component needed to meet the schedule. It is usually implemented in the form of a computer-based information system designed to plan and control raw materials used in production. It assumes that forecasted demand is reasonably accurate and that suppliers can deliver based upon this accurate schedule. MRP is a centralized push-through system, output based on forecasted demand is pushed through to the next department or to inventory.
An advantage of using bar codes rather than other means of identification of parts used by a manufacturer is that
Answer(s): B
A reason to use bar codes rather than other means of identification is to record the movement of parts with minimal labor costs.
If a just-in-time purchasing policy is successful in reducing the total inventory costs of a manufacturing company, which of the following combinations of cost changes would be most likely to occur?
Answer(s): D
In this situation, the company will be receiving fewer materials at any point in time, increasing the likelihood of stockout and thereby resulting in an increase in a reduction in the carrying cost. At the same time, the average inventory will be less, resulting in a reduction in the carrying cost.
In an economic order quantity EOQ) model, both the costs per order and the holding costs are estimates. If those estimates are varied to determine how much the changes affect the optimal EOQ, such an analysis would be called a
An economic order quantity EOQ) sensitivity analysis involves varying the holding carrying) costs per unit and/or the order costs to determine how much the changes affect the optimal EOQ.
With regard to inventory management, an increase in the frequency of ordering will normally
Answer(s): C
Inventory carrying costs can sometimes be transferred to suppliers. If a seller has good enough control of demand schedules to know exactly when goods are needed, orders can be placed so that goods arrive no earlier than when actually needed. This practice relies on a supplier who is willing to take the responsibility for storing the needed inventory and shipping it to arrive on time. Suppliers are more willing to provide this type of service when they have many competitors.
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