Question 1

Setup cost is the cost involved in changing over a machine to produce a different component or item.

Accepted Answer

A) True 
 B)False

Question 2

For a given level of annual demand (D),as lot sizes (Q)increase there is a trade off between higher holding costs and lower ordering or setup costs.

Accepted Answer

A) True 
 B)False

Question 3

Inventory used to increase predictable,uneven rates of demand or supply,which businesses often face,is called anticipation inventory.

Accepted Answer

A) True 
 B)False

Question 4

Service level is the desired probability of not running out of stock in any one order cycle.

Accepted Answer

A) True 
 B)False

Question 5

As the holding cost (H)decreases,the economic order quantity (EOQ)increases.

Accepted Answer

A) True 
 B)False

Question 6

A stockout occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.

Accepted Answer

A) True 
 B)False

Question 7

Table 5.11
The following information has been collected on an independent demand item:
 Demand $= 30$ units per week (assume 52 weeks/ year)
Ordering and setup cost $= \$ 50$ per order
Holding cost $= \$ 8$ per unit per year
Lead time $= 1$ week
Standard deviation in weekly demand $= 8$ units
Cycle-service level $= 90 \%$ 
You will need to refer to a normal table to answer the question(s).
-Use the information from Table 5.11.Design a periodic review system (P system),with P = 5 weeks.What target inventory T will provide the desired 90 percent cycle-service level?

Accepted Answer

A)  between 53 and 57 units 
B)  between 172 and 176 units 
C)  between 188 and 192 units 
D)  between 202 and 206 units 
A)  between 53 and 57 units 
B)  between 172 and 176 units 
C)  between 188 and 192 units 
D)  between 202 and 206 units

Question 8

Describe the basic tactics used to reduce inventory.These tactics are described in the text as primary and secondary levers.

Accepted Answer

1.Safety stock inventory.The primary lev

Question 9

The reorder point is the measurement of an item's ability to satisfy demand.

Accepted Answer

A) True 
 B)False

Question 10

Customer orders waiting to be processed are called an order backlog.

Accepted Answer

A) True 
 B)False

Question 11

A store has collected the following information on one of its products:
Demand = 10,000 units/year
Standard deviation of weekly demand = 25 units
Ordering costs = $30/order
Holding costs = $4/unit/year
Cycle-service level = 95% (z for 90% = 1.28)
Lead time = 2 weeks
Number of weeks per year = 50 weeks
a.If a firm uses the continuous review system to control the inventory,what would be the order quantity and reorder point?
b.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 200 units.There were no scheduled receipts at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews.)

Accepted Answer

a. @#LAT-DLM& units @#LAT-DLM& units
b.

Question 12

What are the pressures for high inventories?

Accepted Answer

The pressures for high invento

Question 13

Customer orders waiting to be processed are called ________.

Accepted Answer

The answer of Customer orders waiting to be processed are...

Question 14

Pipeline inventory is a type of inventory that is usually maintained by

Accepted Answer

A)  gasoline suppliers only. 
B)  electrical utilities only. 
C)  any manufacturer moving materials from point to point. 
D)  a trucking company making emergency shipments. 
A)  gasoline suppliers only. 
B)  electrical utilities only. 
C)  any manufacturer moving materials from point to point. 
D)  a trucking company making emergency shipments.

Question 15

Which one of the following is NOT a method for tracking inventory and assuring accurate records?

Accepted Answer

A)  assign responsibility to specific employees for issuing and receiving materials 
B)  updating the reorder points to minimize safety stock 
C)  cycle counting 
D)  logic error checks 
A)  assign responsibility to specific employees for issuing and receiving materials 
B)  updating the reorder points to minimize safety stock 
C)  cycle counting 
D)  logic error checks

Question 16

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

Accepted Answer

A)  They will be reduced by a factor of 1.41. 
B)  They will not change. 
C)  They will be reduced by a factor of 2.00. 
D)  They will be increased by a factor of 1.41. 
A)  They will be reduced by a factor of 1.41. 
B)  They will not change. 
C)  They will be reduced by a factor of 2.00. 
D)  They will be increased by a factor of 1.41.

Question 17

For continuous review (Q)inventory systems,fixed quantities of items are ordered each time inventory levels reach the reorder point (R).

Accepted Answer

A) True 
 B)False

Question 18

Which one of the following statements concerning a continuous review system is best?

Accepted Answer

A)  The inventory position (IP) of an item measures the item's ability to satisfy future demand, relying only on the on-hand inventory. 
B)  An item's inventory position under a continuous review system increases by Q units as soon as an order is received. 
C)  An item's on-hand inventory increases by Q units as soon as an order is placed. 
D)  Under a continuous review system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts. 
A)  The inventory position (IP) of an item measures the item's ability to satisfy future demand, relying only on the on-hand inventory. 
B)  An item's inventory position under a continuous review system increases by Q units as soon as an order is received. 
C)  An item's on-hand inventory increases by Q units as soon as an order is placed. 
D)  Under a continuous review system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts.

Question 19

Table 5.6
Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand = 50,000 units/year
Ordering cost = $35/order
Holding cost = $2/unit/year
Lead time = 3 weeks
Standard deviation in weekly demand = 125 units
You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.6.What is the EOQ for this item?

Accepted Answer

A)  less than or equal to 1100 units 
B)  greater than 1100 but less than or equal to 1200 units 
C)  greater than 1200 but less than or equal to 1300 units 
D)  more than 1300 units 
A)  less than or equal to 1100 units 
B)  greater than 1100 but less than or equal to 1200 units 
C)  greater than 1200 but less than or equal to 1300 units 
D)  more than 1300 units

Question 20

What are the costs and pressures to hold relatively low inventory levels?

Accepted Answer

1.Cost of capital: The cost of capital i

Setup cost is the cost involved in changing over a machine to produce a different component or item.

For a given level of annual demand (D),as lot sizes (Q)increase there is a trade off between higher holding costs and lower ordering or setup costs.

Inventory used to increase predictable,uneven rates of demand or supply,which businesses often face,is called anticipation inventory.

Service level is the desired probability of not running out of stock in any one order cycle.

As the holding cost (H)decreases,the economic order quantity (EOQ)increases.

A stockout occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.

Describe the basic tactics used to reduce inventory.These tactics are described in the text as primary and secondary levers.

The reorder point is the measurement of an item's ability to satisfy demand.

Customer orders waiting to be processed are called an order backlog.

What are the pressures for high inventories?

Customer orders waiting to be processed are called ________.

Pipeline inventory is a type of inventory that is usually maintained by

Which one of the following is NOT a method for tracking inventory and assuring accurate records?

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

For continuous review (Q)inventory systems,fixed quantities of items are ordered each time inventory levels reach the reorder point (R).

Which one of the following statements concerning a continuous review system is best?

What are the costs and pressures to hold relatively low inventory levels?

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Capacity

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters

Exam 5: Inventory Management

Setup cost is the cost involved in changing over a machine to produce a different component or item.

For a given level of annual demand (D),as lot sizes (Q)increase there is a trade off between higher holding costs and lower ordering or setup costs.

Inventory used to increase predictable,uneven rates of demand or supply,which businesses often face,is called anticipation inventory.

Service level is the desired probability of not running out of stock in any one order cycle.

As the holding cost (H)decreases,the economic order quantity (EOQ)increases.

A stockout occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.

Describe the basic tactics used to reduce inventory.These tactics are described in the text as primary and secondary levers.

The reorder point is the measurement of an item's ability to satisfy demand.

Customer orders waiting to be processed are called an order backlog.

What are the pressures for high inventories?

Customer orders waiting to be processed are called ________.

Pipeline inventory is a type of inventory that is usually maintained by

Which one of the following is NOT a method for tracking inventory and assuring accurate records?

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

For continuous review (Q)inventory systems,fixed quantities of items are ordered each time inventory levels reach the reorder point (R).

Which one of the following statements concerning a continuous review system is best?

What are the costs and pressures to hold relatively low inventory levels?

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Capacity

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters