1. Define a) Baumol model: is an economic model of the transactions demand for money b) Total carrying cost: the total cost of holding inventory. This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to perishability, pilferage, shrinkage and insurance
Total ordering cost
Total inventory costs c) Economic ordering quantity: order quantity that minimizes the total holding costs and ordering costs
EOQ model: is the order quantity that minimizes the total holding costs and ordering costs. It is one of the oldest classical production scheduling models
EOQ range: is the number of units that a company should add to inventory with each order to minimize the total costs of inventory d) Reorder point: is the level of inventory which triggers an action to replenish that particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such that, when stock falls to this amount, the item must be reordered.
Safety stock: is a term used by logisticians to describe a level of extra stock that is maintained to mitigate risk of stockouts (shortfall in raw material or packaging) due to uncertainties in supply and demand e) Red-line method
Two-bin method
Computerized inventory control system f) Just in time system: is an inventory strategy companies employ to increase efficiency ... supply system represents a shift away from the older just-in-case strategy
Outsourcing

2. Indicate by a (+), (-) or (0) whether each of the following events would probably cause average annual inventory holdings to rise fall or be affected in an indeterminate manner a) Our suppliers change from delivering by train to air freight + b) We change from producing just in time to meet seasonal demand to steady year round production (0) c) Competition in the markets in