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Adverse effects
- Increased costs arise from the extra stockholding costs
caused by the average stock level being higher due to the
larger order quantity.
ABC Analysis
• For 'C class items still relaxed inventory procedures are used.
VED analysis
• VED analysis can be very useful to capital
intensive process industries. As it analyses
items based on their critically, it can be
used for those special raw materials which are
difficult to procure
• V’
• stands for vital items and their stock analysis
requires more attention, because out-of-stock
situation will result in stoppage of production.
Thus, 'V items must be stored adequately to
ensure smooth operation of the plant.
• E'
• means essential items. Such items are
considered essential for efficient running but
without these items the system would not fail.
Care must be taken to see that they are always
in stock
• D’
• stands for desirable items which do not affect
the production immediately but availability of
such items will lead to more efficiency and
less fatigue
EPQ
• Economic production quantity (EPQ) is the
quantity of a product that should be
manufactured in a single batch so as to
minimize the total cost that includes setup
costs for the machines and inventory holding
costs.
MCQ
• In the basic EOQ model, if D = 6,000 per year,
S = $100, H = $5 per unit per month, the
Economic Order Quantity is approximately
• a. 527
• b. 100
• c. 490
• d. 142
• In the basic EOQ model, if D = 6,000 per year,
S = $100, H = $5 per unit per month, the
Economic Order Quantity is approximately
• a. 527
• b. 100
• c. 490
• d. 142
• Which of the following statements about the
basic EOQ model is false?
• a. If the setup cost were to decrease, the EOQ
would fall.
• b. If annual demand were to increase, the EOQ
would increase.
• c. If the ordering cost were to increase, the EOQ
would rise.
• d. If annual demand were to double, the EOQ
would also double.
• Which of the following statements about the
basic EOQ model is false?
• a. If the setup cost were to decrease, the EOQ
would fall.
• b. If annual demand were to increase, the EOQ
would increase.
• c. If the ordering cost were to increase, the EOQ
would rise.
• d. If annual demand were to double, the EOQ
would also double.