It is costly to hold inventory, but inventory can also be useful in a process because a. adding inventory to a process will shorten the average time a unit spends in a process. b. adding inventory to a process can help reduce situations in which sales are lost due to uncertain demand. c. adding inventory to a process is likely to increase quality. d. adding inventory to a process will increase the profit margin of the item.

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Answer 1

Textbook Question

Chapter 10, Problem 1CQ

It is costly to hold inventory, but inventory can also be useful in a process because

a. adding inventory to a process will shorten the average time a unit spends in a process.
b. adding inventory to a process can help reduce situations in which sales are lost due to uncertain demand.
c. adding inventory to a process is likely to increase quality.
d. adding inventory to a process will increase the profit margin of the item.

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

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The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: 2,300 January 1,500 May February 1,700 June 2,100 March April 1,700 1,700 July August 1,900 1,500 Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. The average monthly demand requirement = units. (Enter your response as a whole number.) In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers). Ending E Period…

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Answer 2

Textbook Question

Chapter 10, Problem 1CQ

It is costly to hold inventory, but inventory can also be useful in a process because

a. adding inventory to a process will shorten the average time a unit spends in a process.
b. adding inventory to a process can help reduce situations in which sales are lost due to uncertain demand.
c. adding inventory to a process is likely to increase quality.
d. adding inventory to a process will increase the profit margin of the item.

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

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Answer 3

Textbook Question

Chapter 10, Problem 1CQ

It is costly to hold inventory, but inventory can also be useful in a process because

a. adding inventory to a process will shorten the average time a unit spends in a process.
b. adding inventory to a process can help reduce situations in which sales are lost due to uncertain demand.
c. adding inventory to a process is likely to increase quality.
d. adding inventory to a process will increase the profit margin of the item.

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

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Answer 4

Textbook Question

Chapter 10, Problem 1CQ

It is costly to hold inventory, but inventory can also be useful in a process because

a. adding inventory to a process will shorten the average time a unit spends in a process.
b. adding inventory to a process can help reduce situations in which sales are lost due to uncertain demand.
c. adding inventory to a process is likely to increase quality.
d. adding inventory to a process will increase the profit margin of the item.

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

Answer 8

Expert Solution & Answer

Summary Introduction

To determine: The advantage of using inventory.

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

To determine: The advantage of using inventory.

Answer 12

Explanation of Solution

Determine the advantage of using inventory:

Even though holding inventory costs for the firm, it will be useful for the company to avoid stock-outs. Adding inventory helps the firm to manage the situation in which the products go out-of-stock due to uncertain demand. It might lead to loss of sales. Adding inventory helps to avoid this.

Hence, option (b) is correct and options (a), (c), and (d) are incorrect.

Answer 13

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