Inventory Management Chapter 2

What are the primary reasons for holding inventory?

What is the requirement for effective inventory management?

Briefly describe each of the courses associated with inventory?

Contrast independent and dependent demand with respect to inventories.

List the major assumptions of the EOQ model.

How would you respond to the criticism that EOQ model tend to provide misleading results because value of D, Co, and Ch are, at the best, educated guesses?

Explain brieftly how a higher holding cost can result in a decrease in inventory.

What is safety stock and what is its purpose?

Under what circumstances would the amount of safety stock hold be: a, Large? b, small? c, zero?

The lighter-N-Brighter Company manufactures a standard light bulb. Production is steady, at an annual rate of 45,000 units. One part for this lamp is ordered from an outside supplier. The ordering cost is 10$, and annual holding cost is 0.10$ per part. a. What is the optimal order quantity? b. What is the total stocking cost? c. If the company decides to place an order every month, by how much will the total stocking cost increase?