Font size
WorksheetsEconomic ORder quantity
Total questions: 30
Worksheet time: 16mins
The expenses incurred to create and process an order to a supplier.
purchasing costs
ordering costs
stockout costs
carrying costs
This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to shrinkage (leakage) and insurance
purchasing cost
ordering cost
stockout cost
carrying cost
This refers to items that the manufacturer has purchased or produced to use in manufacturing a product.
raw material inventory
Work in process inventory
Finished good inventory
Below are the importance of inventory control, except;
How to maximize costs involved, which could directly increase production
How much inventory to be ordered to replace sold inventory
When to order inventory to prevent excess or deficiency in storage
What type of inventory is suitable for the production process
What is EOQ?
Economics Order Quality
Economics Output Order
Economics Order Quantity
Ergonomics Order Quantity
Reorder level determines how low inventory should be before reordering occurs.
TRUE
FALSE
Process of choosing which needs and wants will be satisfied
wants
needs
economic decision making
economic resources
Individuals and organizations that determine what products and services will be available for sale
consumer
producers
managers
entrepreneurs
Things available to be used to produce goods and services
goods
market price
demand
economic resources
What is a consumer?
a person who takes things
a person who purchases goods and services for personal use
a person who takes good away
the economic factors affecting the price, demand, and availability of a commodity
What is a producer?
a person who gives goods away
things people would like to have
the exchanged of goods and services without the use of money
a person, company, or country that makes grows, or supplies goods for sale
What is a free market economy?
An economy based on supply and demand with little or no government control
The international exchange of goods
An economy in which decisions are made by the government
An economy that is communist
A farmer would fall under which economic activity?
Primary
Secondary
Tertiary
What is supply?
the amount of an item you have
how many people want your good/service
the money you have left over after you paid your bills
What is demand?
the amount of an item you have
how many people want your good/service
the money you have left over after you paid your bills
What is profit?
the amount of an item you have
how many people want your good/service
the money you have left over after you paid your bills
Functions of Inventory
To decouple various parts of the production process by covering delays
To protect the company against fluctuations in demand
To provide a selection for customers
To take advantage of quantity discounts
To hedge against inflation
It is a network between a company and its suppliers to produce and distribute a specific product to the final buyer.
Supply Chain
Production
EOQ
Supply
Types of Demand
Independent Demand
Dependent Demand
Order Quantity Strategy
Fixed-order quantity
Order n
periods
Min-max system
Order n periods
Order exactly what is needed for the next period
Supply
Lot-for-lot
Inventory Management
Min-Max System
An optimizing method used for determining order quantity and reorder points
EOQ
ECQ
EPG
EPQ
A model that allows for incremental product delivery
Economic Order Quantity
Economic Production Quantity
Quantity Discount Model
Modifies the EOQ process to consider cases where quantity discounts are available
Quantity Discount Model
Economic Order Quantity
Discount Model
Over Production Model
Items are finished goods or other items sold to someone outside the company
Independent Demand
Dependent Demand
Demand
Interdependent Demand
Items are materials or component parts used in the production of another item (e.g., finished product)
Dependent Demand
Independent Demand
Types of Inventory
Anticipation or seasonal inventory
Safety stock: buffer demand fluctuations
Lot-size or cycle stock: take advantage of quantity discounts or purchasing efficiencies
Pipeline or transportation inventory
Speculative or hedge inventory protects against some future event, e.g. labor strike
Capital, storage, and risk cost typically stated as a % of the unit value,
e.g. 15-25%
Shortage Costs
Ordering Cost
Holding Costs
Item Cost
When on-hand inventory falls below a predetermined minimum level, order enough to refill up to maximum level
Min - Max System
Fix Order Quantity
Product of N
Lot - for - Lot
