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Review Questions pg. 619 #1-7
1) Independent demand consists of demands for various items that are unrelated to each
other. An example would be workstations producing many parts all of which are unrelated
by meet some external demand requirement. Dependent demand differs in that any one
item is the direct result of the need for another item that is usually higher-up on another
level. In auto manufacturing industries, machines run on straight-forward computation of
what materials to use to assemble cars. McDonalds would run under independent demand
since their stock is based on order and consumer demand, personal copiers are dependent
since specified materials are used to make the end-product and pharmaceutical houses are
independent, based on consumer demand.
2) In-process inventory is the amount of inventory in the process; the goal is to reduce this
in order to reduce lead time. Safety stock inventory is the extra amount carried in addition
to the expected demand and seasonal inventory is based on quarterly results of what
amount was needed during peak seasons: example=Halloween and Christmas in the United
States.
3) In general, Holding costs(costs associated to storage, handling, insurance, pilferage,
breakage, obsolescence, depreciation, taxes and opportunity coasts of capital), Setup costs
(specific equipment arranged, filling paper work and moving certain materials aroun
