1. Why is it better to view inventory management in the broader context of logistics, than to consider it as a separate function? 2. The aim of inventory management can be summarized as 'achieving a specified level of customer service at minimum cost'. To what extent do you think that this is true? 3. Is it really possible for stocks of goods sitting in a warehouse to have a strategic impact on an organization? 4. The framework for all inventory decisions is set by higher decisions, and a balance of internal and external factors. What exactly does this mean, and is it necessarily true? 5. In practice, it can be difficult to find the costs of holding stock. Why is this? How can these difficulties be overcome? Are there any other views of inventory costs that could be easier to work with? 6. What are the assumptions of the economic order quantity? How valid are these? What factors in real inventory control are not included in the economic order quantity model? 7. We have described some simple extensions to the economic order quantity, and could have looked at many more complicated models. When do you think that it is worth using a more sophisticated model, rather than using the guidelines given by a simple model? 8. Nobody likes waiting for a product they have decided to buy, so why would an organization deliberately work with shortages? 9. It is often difficult to find reliable costs for stocks. With shortages this seems almost impossible, how do you find a cost for loss of goodwill or reduced future sales? Does this mean that any analysis of shortages is inevitably based on flimsy evidence? 10. Every organization thinks that its problems with inventories are unique. To what extent do you think they are right? 11. What are the benefits of short lead times? How can these be achieved in practice? 12. Suppose that you have recorded the lead time for an item as follows: Demand is constant at around 10 units a week and the economic order quantity has been calculated at 100 units. What ordering policy gives a cycle service level of 95 per cent for the item? 13. In a given period, demand for an item is equally likely to be any value between 1 and 3units. Each unit of the item costs 75 and can be sold for 100. At the end of the period all unsold stock is passed to a recycler who pays 25 a unit. How many units would you buy for the period? Support your answer with proper arguments. 14. Julie paid JD100 a unit for items which she sold for JD200. The last delivery of 100 units arrived when there were 100 units left in stock, and the supplier told Julie that the unit cost had risen to JD125. She immediately raised her price to JD250, and at the end of the financial year she had sold 140 units. Calculate the following: 1. Closing stock = opening stock + purchases - sales 2. Revenue = sales unit price 3. Average cost per unit Assuming FIFO: 4. Cost of sales 5. Value of stock 6. Gross profit Assuming LIFO: 7. Cost of sales 8. Value of stock 9. Gross profit Assuming weighted value: 10. Cost of sales 11. Value of stock 12. Gross profit