【正文】 as a result, if we are using the EOQ approach, we will have to place a smaller order, resulting in a lesser inventory. On the other hand, if we use a constant amount of a holding cost, the inventory decisions will not be affected by the changes in unit cost (price) of the item. c. Conducting a cycle count once a quarter instead of once a year will result in more frequent counting, which will result in an increase in labor and overhead costs. However, the more frequent counting would also lead to less errors in inventory accuracy and more timely detection of errors, which in turn would lead to timely deliveries to customers, less work in process inventory, more efficient operations, improved customer service, and assurance of material availability. 2. In making inventory decisions involving holding costs, setting inventory levels and deciding on quantity discount purchases, the materials manager, plant manager, production planning and control manager, the purchasing manager, and in some cases the planners who work in production planning and control or purchasing departments should be involved. The level and the nature of involvement will depend on the anizational structure of the pany and the type of product being manufactured or purchased. 3. The technology has had a tremendous impact on inventory management. The utilization of bar coding has not only reduced the cost of taking physical inventory but also enabled real time Instructor’s Manual, Chapter 12 305 updating of inventory records. The satellite control systems available in trucks and automobiles has enabled panies to determine and track the location of intransit inventory. Critical Thinking Exercise 1. Including a wider range of foods provide fast food panies with a petitive edge in terms of improving customer satisfaction and service. However, it has also plicated the operational function of the pany. Expansion of menu offerings can create problems for inventory management because there are more ingredients and inventory items to order and to control the levels of inventory. This means higher labor costs in terms of placing orders, increased storage facility needs and increased need for coordinating the shipments from the supplier so that deliveries can be at low cost and efficient. Increasing the variety of items on the menu will also cause problems with forecasting. Since we have more items on the menu, it is likely that the demand for current menu items will decrease. The forecasts for all items will need to be revised. If we are not able to estimate this possible decrease, then the forecasting problem will result in excess or insufficient inventory levels. 2. a. How important is the item? For example, does it relate to a holiday or other important event, such as graduation cards? b. Are parable substitutes readily available? c. What petitor alternatives are available to customers? d. Is this an occasional occurrence, or indicative of a larger, perhaps ongoing, problem? Memo Writing Exercises (included on the DVD) 1. Cost of carrying inventory must be weighted against the following costs: a. cost of shortages (finished goods inventory) b. cost of failures (workinprocess inventory) c. cost of supplier reliability d. cost of ordering e. cost of setups f. cost of quantity discounts g. cost of smoothing production for seasonal products. 2. The possible advantages of using a single supplier include: a. obtaining a discount due to additional volume purchased from the supplier b. building trust and working with the supplier so that the material will be delivered in a timely fashion to avoid stockouts and excess inventory. The possible advantages of using multiple suppliers include: a. the adverse effect of tardiness will be felt much less when there are multiple sources for the materials. Operations Management, 9/e 306 The main advantage of using the fixed order interval model is the reduction in ordering cost because orders for different parts are aggregated during the order interval. The main disadvantage of using the fixed order interval model is that the pany faces the risk of experiencing shortages during the fixed interval. In this particular situation, the advantages of using a single supplier may be offset by using the fixed order interval model. Instructor’s Manual, Chapter 12 307 Solutions 1. Item Usage Unit Cost Usage x Unit Cost Category 4021 50 $1,400 $70,000 A 9402 300 12 3,600 C 4066 40 700 28,000 B 6500 150 20 3,000 C 9280 10 1,020 10,200 C 4050 80 140 11,200 C 6850 2,000 15 30,000 B 3010 400 20 8,000 C 4400 7,000 5 35,000 B In descending order: Item Usage x Cost Category 4021 $70,000 A 4400 35,000 B 6850 30,000 4066 28,000 4050 11,200 C 9280 10,200 3010 8,000 9402 3,600 6500 3,000 Operations Management, 9/e 308 Solutions (continued) 2. The following table contains figures on the monthly volume and unit costs for a random sample of 16 items for a list of 2,000 inventory items. Dollar Item Unit Cost Usage Usage Category K34 10 200 2,000 C K35 25 600 15,000 A K36 36 150 5,400 B M10 16 25 400 C M20 20 80 1,600 C Z45 80 250 16,000 A F14 20 300 6,000 B F95 30 800 24,000 A F99 20 60 1,200 C D45 10 550 5,500 B D48 12 90 1,080 C D52 15 110 1,650 C D57 40 120 4,800 B N08 30 40 1,200 C P05 16 500 8,000 B P09 10 30 300 C a. Develop an ABC classification for these items. [See table.] b. How could the manager use this information? To allocate control efforts. c. Suppose after reviewing your classification scheme, the manager decides to place item P05 into the “A” category. What would some possible explanations be for that decisio