Questions
1. The concepts of independent and dependent demand are important in inventory management, but
sometimes they aren't clearly distinguishable. Can you find the elements of dependency and in-
dependency in the following situations: selling snacks at a football game, producing bumpers for
automobiles, and selling greeting cards at a shopping center.
2. What would you expect to find as the predominant type of inventory in the following businesses:
a ski manufacturer, a make-to-order tugboat manufacturer, and a printer?
3. Which of the inventory costs (carrying, shortage, or preparation) are most difficult to measure?
How would you determine if you needed more precision in the estimate of the cost?
4. Why might the EOQ model not be appropriate for a dependent-demand item?
5. A friend of yours wants to leapfrog the basic independent demand inventory ideas and go di-
rectly to implementing some of the more advanced concepts. What arguments would you raise
against this strategy? What counterarguments might persuade you the leapfrog strategy would
be OK?
6. How many pairs of socks do you own? How many dress suits? How does this relate to the ABC
concept?
7. Use the analogy of writing home for money to explain the concept of demand during lead time.
Be sure to account for the fact that both lead time and demand are variables.
Fig: 1