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IMT-23: Inventory Management-MT2

IMT-23: Inventory Management-MT2

Inventory and control management



1.       What kind of role does forecasting play in inventory control decision-making?

2.       What are the selective inventory management techniques used by a firm? Explain the basis of the ABC classification.

3.       What is non-productive finished goods inventory? How can one reduce the non-productive component of finished goods inventory?

4.       Differentiate between:

a.       make-to-order & make-to-stock operations

b.       pull & push processes

5.       What is the difference between variety reduction and standardization? Explain two methods of variety reduction that are commonly used in manufacturing industries.



1.       What do you understand by the term "Bills of Materials"? What is its function and how is it used in planning inventory levels?

2.       Why do organizations use collaborative forecasting? What steps are required to make collaborative forecasting successful?

3.       Name the important factors that influence the choice of strategy in aggregate planning. Are these options also applicable to service organizations? What special difficulties do services pose for aggregate planning?

4.       Define spare parts management. What are the different classifications of service parts? Why do they differ?

5.       Distinguish clearly between Material Requirement Planning (MRP I) and Manufacturing Resource Planning (MRP II). What are the principles of their operation?



1.       What is the difference between variety reduction and standardization? Explain two methods of variety reduction that are commonly used in manufacturing industries.

2.       Why workforce management is critical to the success of JIT implementation? Explain with examples.

3.       What are the different types of inventory control? Discuss the method of inventory control you would use as, (a) a medium scale industry manufacturing tools, (b) an assembly line unit manufacturing automobiles. Explain the inventory control method chosen by you and the reasons for the choice.

4.       What do you understand by 'demand amplification'? How does it come about? What are its implications on finished goods inventory?

5.       What are the different maintenance policies? Which policy would you adopt if you were running a job shop? Would you adopt a different policy if you were running a process plant? Explain the reasons for your answer.



A unit manufacturing plastic containers consumes 1350 units of moulded plastic uniformly through the month. The current cost of acquisition is Rs 20 per unit and the carrying cost of the firm is 30% on average based on recent data available, which is not likely to change in the coming months. The firm has to bear a cost of Rs 2400 every time it places an order. Utilizing Inventory Control concepts answer following questions for the given business case:

1.       What is the optimal inventory level for the year ahead using EOQ model?

2.       Compute the total inventory cost to the business?

3.       What is the optimal number of orders to be placed and optimal number of supply days required per order to meet the business requirement?

4.       Assuming that the average lead time was 2 weeks determine the optimal level of safety stock to be maintained?

5.       Assuming that the supplier offers a quantity discount of Rs.2 per unit, provided the order size exceeds 5000 units, what will be incremental profit caused by change in inventory level decision?


Case study -2


The Polish General’s Pizza Parlor is a small restaurant catering to patrons with a taste for European pizza. One of its specialties is Polish Prize pizza. The manager must forecast weekly demand for these special pizzas so that he can order pizza shells weekly.


Recently, Pizzas demand has been as follows:




June 2


June 9


June 16


June 23


June 30


July 7



a. Forecast the demand for pizza for June 23 to July 14 by using the simple moving average method with n = 3.

b. Repeat the forecast by using the weighted moving average method with n=3 and weights of 0.50, 0.30, and 0.20, with 0.50 applying to the most recent demand.

c. Calculate the MAD for each method.


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