How Can a Reduction of In-Transit Inventory Be Encouraged

question 120

Multiple Choice

How can a reduction of in-transit inventory be encouraged?

• A) supplier location near plants
• B) high setup costs
• C) low carrying costs
• D) use of trains, not trucks
• E) low-cost, global suppliers

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Definitions:

Dependent Demand

The demand for components or raw materials that is directly tied to the demand for the final product they contribute to creating.

Production Order Quantity (POQ) Model

An inventory management model that determines the most economical quantity of a product to order or produce, balancing setup costs with holding costs.

EOQ Problem

Economic Order Quantity (EOQ) refers to the ideal order quantity a company should purchase to minimize inventory costs including holding, shortage, and order costs.

Lot Size

The quantity of items that are processed, produced, or ordered as a batch.