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C7 23 Buss Analysis > Deck1 > Flashcards

Deck1 Flashcards

1
Q

Main goals of linear programming

A

minimize expense, maximize profit

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2
Q

EOQ basic description

A

amount of inventory to order to minimize inventory costs

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3
Q

EPQ basic description

A

calculate size of production batches/lots, optimize production lot size

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4
Q

What kinds of things does LP try to maximise

A

Profits
Revenues
Returns
Utilization of machines

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5
Q

What kinds of things does LP try to minimize

A

Costs
Risks
Losses

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6
Q

What are requirements for a problem to be solved by LP?

A

linear objective function
continuous variables
constraints define scarcity of materials, resources
constraints expressed as linear inequalities

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7
Q

What are different constraint types?

A

maximum available budget
maximum available time on a machine
minimum levels of production or investment

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8
Q

Major categories LP can help with

A

Complexity
Unified Decision Making
Risk Assessment

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9
Q

when is sensitivity analysis performed

A

post optimization

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10
Q

dual price sensitivity analysis

A

aka shadow price
isolate RHS values on constraints
tells how much profit can be earned by incresaing a resource
improve most sensitive element

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11
Q

Range of Optimality test

A

considers LHS of objective function

determine how much each value in function can change before crossing any constraint boundaries

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12
Q

How is Simulation used

A

to model random events

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13
Q

types of applications simulation models are used for

A 
Inventory policy
Transportation bookings
New product development
waiting lines
traffic flow
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14
Q

key similarity between linear programming and simulation

A

Risk analysis

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15
Q

Another name for running a simulation model that would be used to predict/determine risk impact

A

What if scenario

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16
Q

3 categories of inventory costs

A

ordering (setup) - costs to buy, incl. logisitics
shortage (stockout) - costs from not having enough
carrying (holding) - costs to store

17
Q

types of inventory accounts

A

raw/packaging - parts, raw ingredients, packaging
finished goods
work in process (WIP) - in between raw and finished
In Transit

18
Q

Inventory Turns

A 
COGS/Average Inventory
# times inventory turns over in a year
19
Q

Inventory Days Coverage

A

(Average Inventory/Cost of Goods Sold) x 365
365/Inventory Turns
average number of days company had inventory before it’s sold

20
Q

ABC classification

A

practice for dealing with inventory complexity
A - fast movers
B - meduium movers
c - slow movers

21
Q

Factors used to determine how much to order and how often for items ordered from a supplier

A

Demand
Cost of item
Ordering costs
Holding costs

22
Q

Factors used to determine how much to order and how often for items ordered from a supplier

A

Demand
Setup
Rate of Production
Holding

23
Q

Annual Holding cost

A

Average Inventory Level x (holding cost/unit/year)

(EOQ/2)H

24
Q

Annual Ordering cost

A

Annual demand / order quantity*cost per order

(D/EOQ)*O

25
Q

Total Inventory Cost

A

holding cost + ordering cost

26
Q

EOQ

A

used to minimize inventory costs for purchased goods

27
Q

EPQ

A

used to minimize inventory costs for manufactured goods

28
Q

EOQ formula

A

sqrt((2DO)/H)
D - annual demand
O - cost to place order
H = annual holding cost

29
Q

EPQ formula

A

sqrt((2DSR/H(r-d))
S - Setup costs
R - rate of production
demand and production must be over same time frame

30
Q

production rate in relation to demand

A

production rate is greater

31
Q

assumptions of EOQ

A

product arrives complete

arrives promptly after being ordered

32
Q

assumptions of EOQ and EPQ

A

demand, holding, ordering, purchases costs known and constant

33
Q

ROP and lead time

A

Reoder point - when more inventory needs to be ordered

lead time - time between order placement and delivery

34
Q

total inventory costs formula

A

carrying + ordering + backorder costs

35
Q

risks of too much inventory from bulk discount buying

A

increased carrying costs
product obsolescence
shift in product demand

36
Q

formula for orders per year

A

Demand/EOQ

37
Q

formula for average inventory

A

EOQ/2

38
Q

formula for reorder point

A

demand per day * lead time

C7 23 Buss Analysis (1 decks)

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