Chapter Questions
Explain why inventory costs and inventory levels have declined relative to GDP over the last 20 years. Is this beneficial to the economy? Why or why not?
What are the major components of inventory carrying cost? How would you measure capital cost for making inventory policy decisions?
. How can inventory carrying cost be calculated for a specific product? What suggestions would you oĂ er for determining the measure of product value to be used in this calculation?
Explain the diảerences between inventory carrying costs and ordering costs.
Why is it usually more difficult to determine the cost of lost sales for finished goods than it is for raw materials inventories?
How does inventory carrying cost for inventory in transit diảer from the cost of inventory at rest?
What is the diajerence between independent and dependent demand items? Why is this distinction important to inventory managers?
. Compare and contrast the fixed quantity version of EOQ with the fixed interval version. In which situations would each be used?
Why has the JIT approach to inventory control become popular in some industries? How does the JIT approach compare to the EOQ approach to inventory management? Should JIT be adopted by all inventory managers? Why or why not?
Explain the essential characteristics of MRP, DRP, and VMI. How do they operate with each other to provide a systematic approach to managing supply chain inventories?
What are the benefits of classifying inventory using $\mathrm{ABC}$ analysis? What are the diderent types of criteria that could be used to classify inventory?
. What is the underlying principle of the square-root rule? How do inventories change as the number of warehouses in a logistics network changes?