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Chapter 4: Q2OQ. (page 544)

Almost certainly you have seen vending machines being serviced on your campus and elsewhere. On a predetermined schedule, the vending company checks each machine and fills it with various products. This is an example of which category of inventory model?

Short Answer

Expert verified

In this situation, the vending machines on your campus and elsewhere are serviced on a specified timetable, so it adheres to the Fixed Reorder Period System.

Step by step solution

01

The Fixed Period Ordering System

The Fixed Period Ordering System is an inventory model in which the alert is triggered after a certain period and the order for inventory restocking is issued regularly. The order must be following the demand at the moment. Inventory supply is a continuous activity that occurs at regular intervals.

02

On a predetermined schedule, the vending company checks each machine and fills it with various products

Theinventory modelis a mathematical model that enables an enterprise to calculate the optimal volume ofinventoriesto be retained throughout the manufacturing period, control the purchasing frequency, decide on the number of products or raw materials to be processed, and monitor the movement of raw material and commodity supplies to provide consumers with continuous service without interruption in delivery. Inventory models are classified into two types:

a) System of fixed reorder quantity

b) A system with fixed reorder periods

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Most popular questions from this chapter

Question: Which qualitative forecasting technique was developed to ensure that the input from every participant in the process is weighted equally?

ERP systems from different vendors vary quite a bit, but typically they will focus on at least what four major areas?

Distinguish between in-process inventory, safety stock inventory, and seasonal inventory.

Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 10,000; winter, 8,000; spring, 7,000; summer, 12,000. Inventory at the beginning of fall is 500 units. At the beginning of fall, you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stock-outs at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, \(100 for each temp; layoff, \)200 for each worker laid off; inventory holding, \(5 per unit-quarter; backorder, \)10 per unit; straight time, \(5 per hour; over time, \)8 per hour. Assume that the productivity is 0.5 units per worker hour, with eight hours per day and 60 days per season.

Planning orders using a lot-for-lot (L4L) technique is commonly done because it is simple and intuitive. It also helps to minimize holding costs as you are only ordering what is needed when it is needed. So far it sounds like a good idea. Are there any disadvantages to this approach?
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