1. What are ordering costs? Provide examples.
2. What are setup costs? Illustrate with examples.
3. What are carrying costs? Illustrate with examples.
4. What are stockout costs?
5. Explain why, in the traditional view of inventory, carrying costs increase as ordering costs decrease.
6. Discuss the traditional reasons for carrying inventory.
7. What is the economic order quantity?
8. Suppose that a material has a lead time of three days and that the average usage of the material is 12 units per day. What is the reorder point? If the maximum usage is 15 units per day, what is the safety stock?
9. Explain how safety stock is used to deal with demand uncertainty.