Exam 11: Inventory Management

In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.

Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function?

If annual demand is 50,000 units, the ordering cost is $25 per order, and the holding cost is $5 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Which of the following is not a reason to carry inventory?

Fixed-order quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.

Which of the following is an assumption of the basic fixed-order quantity inventory model?

If demand for an item is normally distributed, we plan for demand to be twice the average demand and carry two standard deviations worth of safety stock inventory.

The key difference between a fixed-order quantity inventory model where demand is known and one where demand is uncertain is in computing the reorder point.

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

The 80-20 rule, that is the logic of the few having the greatest importance and the many having little importance has been broadened to include inventory situations. The term often used to refer to this logic is called what?

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.

The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.

Using the ABC classification system for inventory, which of the following is a true statement?

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?

Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.

If the cost to change from producing one product to producing another were zero the lot size would be very small.

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?

Which of the following are fixed-order quantity inventory models?

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?

The average cost of inventory in the United States is 20 to 25 percent of its value.