02 Jun Question 121. The injection molding department of a company uses
Question
121. The injection molding department of a company uses 40 pounds of a powder a day. Inventory is reordered
when the amount on hand is 240 pounds. Lead time averages ?ve days. It is normally distributed and has a
standard deviation of two days. What is the probability of a stockout during lead time?
122. A shop owner uses a reorder point approach to restocking a certain raw material. Lead time is six days.
Usage of the material during lead time is normally distributed with a mean of 42 pounds and a standard deviation
of 4 pounds. When should the raw material be reordered if the acceptable risk of a stockout is 3%?
123. The manager of a bakery orders three ‘cake-to-go’ wedding cakes every Saturday to accommodate last minute
purchases. Demand for the cakes can be described by a Poisson distribution that has a mean of 2. The cakes cost
$10 each to prepare, and they sell for $26 each. Any cakes that haven’t been sold by the end of the day are sold for half price the next day. Usually, half of those are sold and the rest are tossed. What stocking level would be
appropriate?
124. A manager has just received a revised price schedule from a vendor. What order quantity should the manager
use in order to minimize total costs? Annual Demand is 120 units, ordering cost is $8, and annual carrying cost is
$1 per unit.
A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same
as ordering cost. The production rate would be about double the usage rate.
125. Compared to the EOQ, the economic production quantity would be approximately:
A. the same
B. 20 percent larger
C. 40 percent larger
D. 20 percent smaller
E. 40 percent smaller
126. Compared to the EOQ, the maximum inventory would be approximately:
A. 70 percent higher
B. 30 percent higher
C. the same
D. 30 percent lower
E. 70 percent lower
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer
each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains
four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to ?ve
percent of the cost of the beer.
127. At what point should he reorder Stein beer?
A. 0 cases remaining
B. 4 cases remaining
C. 12 cases remainingD. 16 cases remaining
E. 20 cases remaining
128. If he were to order 16 cases of Stein beer at a time, what would be the length of an order cycle?
A. 0.25 days
B. 3 days
C. 1 day
D. 4 days
E. 20 days
129. If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?
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