Homework

This homework has to be handwritten in A4 paper with margin of 2 cm.

Deadline: 20 October 2023 by 11:30 AM

Answer the following questions:

1. 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?
2. What are the major components of inventory carrying cost? How would you measure
capital cost for making inventory policy decisions?
3. How can inventory carrying cost be calculated for a specific product? What suggestions
would you offer for determining the measure of product value to be used in this
calculation?
4. Explain the differences between inventory carrying costs and ordering costs.
5. Why is it usually more difficult to determine the cost of lost sales for finished goods than
it is for raw materials inventories?
6. How does inventory carrying cost for inventory in transit differ from the cost of inventory
at rest?
7. What is the difference between independent and dependent demand items? Why is this
distinction important to inventory managers?
8. Compare and contrast the fixed quantity version of EOQ with the fixed interval version.
In which situations would each be used?
9. 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?
10. 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?
11. What are the benefits of classifying inventory using ABC analysis? What are the different
types of criteria that could be used to classify inventory?
12. What is the underlying principle of the square-root rule? How do inventories change as
the number of warehouses in a logistics network changes?