Materials Control Methods Quiz

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Questions and Answers

What is the formula for calculating the re-order level in the Min-Max Method?

  • Maximum usage + Maximum re-order
  • Maximum usage × Maximum re-order (correct)
  • Minimum limit + Maximum usage
  • Minimum limit × Minimum re-order

In the Two-bin Method, why is the first bin important?

  • It is where low-cost items are stored
  • It holds the maximum quantity of items
  • It contains the safety stock
  • It stores the items required from order receipt to next order placement (correct)

What does the Minimum level provide in the Min-Max Method?

  • Safety stock quantity
  • Maximum usage limit
  • Margin of safety (correct)
  • Order point for low-cost items

How is the re-order level calculated in the Order Cycling Method?

<p>Cycle time multiplied by cycle review days (C)</p> Signup and view all the answers

What is the purpose of setting a maximum quantity for each item in the Min-Max Method?

<p>To minimize storage costs (D)</p> Signup and view all the answers

What is the economic order quantity for the replacement blades?

<p>240 units (C)</p> Signup and view all the answers

How many orders are needed per year for the replacement blades?

<p>100 orders (D)</p> Signup and view all the answers

What is the total cost of ordering the replacement blades for the year?

<p>$120 (C)</p> Signup and view all the answers

When should the next order for replacement blades be placed according to the reorder point calculation?

<p>When stock level reaches 100 units (C)</p> Signup and view all the answers

What is the approximate number of #6 screws Leyla Tas should order each time?

<p>10,000 screws (B)</p> Signup and view all the answers

How many supply orders of #6 screws would be placed per year?

<p>10 orders/year (C)</p> Signup and view all the answers

What is the approximate length of a supply order in days for #6 screws?

<p>29.5 days (B)</p> Signup and view all the answers

Calculate the minimum total cost of inventory for #6 screws per year.

<p>235 MU/year (C)</p> Signup and view all the answers

What is the safety stock level recommended for #6 screws to account for variability in demand?

<p>2,000 screws (D)</p> Signup and view all the answers

How does the annual ordering cost for #6 screws compare to the annual holding cost?

<p>Annual ordering cost is exactly equal to the annual holding cost (B)</p> Signup and view all the answers

Flashcards

Re-order Level (Min-Max Method)

Maximum usage multiplied by Maximum re-order period.

First Bin (Two-Bin Method)

It contains the inventory needed during the replenishment lead time.

Minimum Level (Min-Max Method)

A buffer stock to prevent stockouts due to unexpected demand or delays.

Re-order Level (Order Cycling Method)

Cycle time multiplied by cycle review days.

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Maximum Quantity (Min-Max Method)

To control inventory costs, specifically storage expenses.

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Economic Order Quantity (blades)

240 units.

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Orders Needed Per Year (blades)

100 orders.

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Total Ordering Cost (blades)

$120.

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Reorder Point (blades)

When stock level reaches 100 units.

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Order Quantity (#6 screws)

10,000 screws.

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Supply Orders per Year (#6 screws)

10 orders/year.

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Supply Order Length (#6 screws)

29.5 days.

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Minimum Total Inventory Cost (#6 screws)

235 MU/year.

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Safety Stock Level (#6 screws)

2,000 screws.

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Annual cost comparison (#6 screws)

They are exactly equal.

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