Operations Management Exam 3 (Set 2)

Front 1

Inventory definition

Back 1

A stock of items kept on hand by an organization to use to meet customer demand.

Front 2

Types of inventory

Back 2

Raw materials, components, work in progress, finished goods, dist inventory, maintenance repair, and operating supplies

Front 3

MRP

Back 3

Material Requirements Planning:
American Production ICS. Developed in USA by IBM.

Front 4

JIT

Back 4

Just in time- developed in Japan by Mr, Ohno. Used to eliminate waste in a system.

Front 5

TOC

Back 5

Theory of constraints. Developed in Israel by Goldratt.

Front 6

Relevant costs:

Back 6

Idea is that by looking into cost we want to minimize it

Front 7

Min. total cost basic equation

Back 7

Holding cost + Ordering cost

Front 8

Holding costs

Back 8

variable costs dependent upon the amount of inventory held. Costs include storage cost, capital cost. To buy inventory must borrow $$$ the interest cost is included in holding cost. Risk cost - if item gets old you'll have to get rid of it at a cheaper price than you paid.

Front 9

What questions are holding and ordering costs used to answer?

Back 9

They answer the questions:
When to order
How much to order.

Front 10

Fixed order quantity models

Back 10

Economic order quantity model (EOQ)
Quantity Discount Model
Economic Production Quantity (EPQ)

Front 11

Equation for average inventory

Back 11

Quantity / 2

Front 12

Total holding cost equation

Back 12

Q/2 (H)

Front 13

What is holding cost based off of?

Back 13

Average inventory

Front 14

D =

Back 14

Annual demand

Front 15

# of orders equation

Back 15

D/Q

Front 16

Total ordering cost equation

Back 16

D/Q (S)

Front 17

S =

Back 17

Ordering cost for each order

Front 18

Given what we know about holding cost and ordering cost what is the Minimum total cost equation?

Back 18

Q / 2 (H) + D / Q (S)

Front 19

What kind of relationship exists between FC and quantity?

Back 19

Direct relationship because as quantity increases, then holding cost increases.

Front 20

What is the relationship between OC and quantity?

Back 20

Ordering costs have inverse relationship.

Front 21

What is true in regards to holding costs and ordering costs at the point of intersection?

Back 21

They are equal

Front 22

Re-order point

Back 22

When you reach zero should you reorder? no you must find the point when you should re-order to avoid a shortage.

Front 23

ROP Re order point equation

Back 23

Daily demand x lead time

Front 24

Quantity discount equation

Back 24

Q / 2 (H) + D / Q (S) + P(D)
P = price/unit cost

Front 25

P=

Back 25

price/unit cost

Front 26

I

Back 26

= % of the unit costs-

Front 27

Q equation

Back 27

square root of 2DS / IP

Front 28

Financial ratio

Back 28

why can department stores sell this at larger quantities? B/c they can buy in bulk and get discounts.

Front 29

Inventory turnover ratio

Back 29

COGS / Avg. inventory
We want this to be higher so they can pass on savings to the customers.

Front 30

For the Economic Production Quantity Model what kind of model is it?

Back 30

Non-instantaneous model

Front 31

What is the equation for IMAX?

Back 31

= (P-d)t

Front 32

Cycle time equation

Back 32

T + T1