Sessions 3 & 4: Inventory

Question 1

What are the 3 different inventory types ?

Answer 1

3 types of inventory:

1) Raw material
2) Work-in-process (WIP)
3) Finished products

Question 2

What is the EOQ model for inventory management ?

Answer 2

The Economic Order Quantity model is a simple model which illustrates the trade-off between fixed order costs and holding costs.

Question 3

What are the 3 types of costs related to inventory management ?

Answer 3

3 types of costs related to inventory management :

1) Holding or carrying costs
2) Order costs
3) Penalty of shortage costs

Question 4

A quoi correspondent les inconnues du EOQ model ?

Answer 4

D = Demand rate per a period time
K = Ordering/Set-up cost
h = Holding cost per unit of product into inventory per unit of time
Q = Order quantity

Question 5

What is the EOQ formula ?

Answer 5

EOQ : Q* = racine de (2D*K/h)

Question 6

What are the 2 multiple ordering policies ?

Answer 6

The 2 multiple ordering policies are:

1) Continuous review Policy
2) Periodic review policy

Question 7

What do you have to look for in the continuous review Policy ?

Answer 7

In the continuous review Policy you have to dertermine :

1) The level of the Reorder point (R)
2) The quantity to be ordered each time an order is placed (Q)

Question 8

What do you have to look for in the periodic review Policy ?

Answer 8

In the periodic review Policy you have to determine :

1) The length of the replenishment (T)
2) The Base-stock level (S)