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Inventory management

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1. estion 1. Tell Me What Does Eoq Make Work For Inventory Control?
Answer :
The EOQ works if its four assumptions match the case it is used on. The
assumptions are:
o Annual demand, carrying costs and ordering costs can be
estimated.
o Inventory level is divided by 2, no safety stock, goods used
uniformly and are gone by next order.
o Stock-out, customer responsiveness and other costs not
considered.
o No quantity discounts.
2. Question 2. Tell Me How Would You Determine The Numbers To Use In The
Eoq Formula?
Answer :
To determine which numbers to use you must look for the following items.
The number of items per order is the quantity(Q). The number of items that
can be sold is D.
D may be the forecast demand for that particular good. The cost of placing
the order is used for S. The final number to find is the carrying cost(C) which
is the cost of the item to be held in inventory.
3. Question 3. Tell Me About The Kinds Of Reordering Systems That Can Be Used
In Inventory Control?
Answer :
There are several types of reordering systems, in this module we discussed
three. The fixed order quantity uses fixed quantities of goods ordered at
various order points to replenish inventory. The fixed order period use fixed
times of reorder with various order quantities to replenish inventory to preset
levels. The final system, just in time uses a constant flow of goods to match
the level of demand.
4. Question 4. Tell Me What Makes A Good Forecasting Model?
Answer :
A good forecast model will have reasonable costs. the accuracy of its
forecasts will allow good decision making. The model will have ample data
available for its use and a relevant time span. The model finally will have a
low interference level.
5. Question 5. Why Do You Need To Recompute Stocking Costs For The Eoq
Level?
Answer :
In order to compare stock costs when using the EOQ model you must
compute the costs for both the original level and the EOQ level of order
quantities.
6. Question 6. Do You Know What Do The Letters In The Eoq And Stocking Cost
Formula Stand For?

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Answer :
The letters in the formulas represent the quantity ordered(Q), the carrying
cost of a unit(C), the demand for the units(D) and the cost of completing a
order(S).
7. Question 7. Tell Me About The Total Stocking Cost In Inventory?
Answer :
Total stocking cost is the cost to the store of holding a good in its inventory.
The stocking cost consists of the carrying cost times half the quantity in
inventory and the order completion cost times demand divided by the
quantity. In its mathematical form the cost is represented by TSC=(Q/2)C +
(D/Q)S.
8. Question 8. Tell Me If You Know When Should Reorders Be Placed?
Answer :
Times for reordering goods vary dependent on the control system you use
and its lead time. In fixed order quantities reorders should be placed when
the safety stock is reached. In fixed period systems the reordering is done at
set time periods. In just in time systems reordering is based on matching the
demand with supply. For just in time a close watch on inventory levels is
needed so that reorders are placed before goods are out of stock.
9. Question 9. Tell Me About Forecasting In Inventory?
Answer :
Forecasting is the process of estimating the future demand of a product.
10. Question 10. Tell Me What Is Demand In Inventory?
Answer :
Demand is the quantity that customers are willing to buy. Demand can be
found through forecasting and is needed to find the EOQ level.
11. Question 11. Tell Me How Can A Computer Help In Forecasting Future
Demand?
Answer :
In the market today there are many computer software packages that can
compute forecasted demand for goods held in inventory.
Question 12. Can You Tell Me What Is Lead Time In Inventory?
Answer :
Lead time is the period of time from which a order for goods is placed until it
is received by the store. Lead time is an important consideration for
determining when orders should be placed.
12. Question 13. Tell Me What Is An Order Quantity In Inventory?
Answer :
An order quantity is the amount of goods that an order requests be shipped
to the store.
13. Question 14. Tell Me What Is An Order Point In Inventory?
Answer :

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1. estion 1. Tell Me What Does Eoq Make Work For Inventory Control? Answer : The EOQ works if its four assumptions match the case it is used on. The assumptions are: Annual demand, carrying costs and ordering costs can be estimated. o Inventory level is divided by 2, no safety stock, goods used uniformly and are gone by next order. o Stock-out, customer responsiveness and other costs not considered. o No quantity discounts. 2. Question 2. Tell Me How Would You Determine The Numbers To Use In The Eoq Formula? Answer : To determine which numbers to use you must look for the following items. The number of items per order is the quantity(Q). The number of items that can be sold is D. o D may be the forecast demand for that particular good. The cost of placing the order is used for S. The final number to find is the carrying cost(C) which is the cost of the item to be held in inventory. 3. Q ...
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