Exam 11: Inventory Management

Safety stock is not necessary in any fixed-time period system.

Using the fixed-time period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity?

The Pareto principle is best applied to which of the following inventory systems?

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

When stocked items are sold, the optimal inventory decision using marginal analysis is to stock that quantity where the probable profit from the sale or use of the last unit is equal to or greater than the probable losses if the last unit remains unsold.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

When developing inventory cost models, which of the following are not included as costs to place an order?

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (C_u) is $120 and the loss resulting from that unit if it is not sold (C_o) is $360, which of the following is the probability of the last unit being sold?

A company has recorded the last six days of daily demand on a single product they sell. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?

Fixed-time period inventory models are "time triggered."

In ABC Printing, Queen's black is a popular input with an annual demand of 50,000 gallons. Ordering cost of $50 per order, and the holding cost is $5 per unit per year; the economic order quantity is 1000. Hence during the year, they used 1000 as the order quantity. An audit of the costs revealed that the true ordering cost was only $25 and the true holding cost was $10 per gallon per year. The correct order quantity would have been 500. How much did ABC lose due to incorrect cost information during the year?

In inventory models, high holding costs tend to favor high inventory levels.

In the fixed-time period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

Which of the following is one of the categories of manufacturing inventory?

The costs associated with reduced inventory results in lower profits.

Which of the following is not necessary to compute the order quantity using the fixed-time period model with safety stock?

One of the drivers of the direct-to-store (direct distribution) approach is the decrease in trucking industry regulation.

Which of the following is usually included as an inventory holding cost?

Which of the following is a perpetual system for inventory management?