Question 1

One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.

Accepted Answer

A) True 
 B)False

Question 2

A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days, and the standard deviation of usage during lead time is 2, which of the following is the desired value of R?

Accepted Answer

A)  About 17.9 
B)  About 19.7 
C)  About 24.0 
D)  About 27.3 
E)  About 31.2 
A)  About 17.9 
B)  About 19.7 
C)  About 24.0 
D)  About 27.3 
E)  About 31.2

Question 3

Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80, and a holding cost per unit per year of $4?

Accepted Answer

A)  $849 
B)  $1,200 
C)  $1,889 
D)  $2,267 
E)  $2,400 
A)  $849 
B)  $1,200 
C)  $1,889 
D)  $2,267 
E)  $2,400

Question 4

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

Accepted Answer

A)  When the record shows a near maximum balance on hand 
B)  When the record shows positive balance but a backorder was written 
C)  When quality problems have been discovered with the item 
D)  When the item has become obsolete 
E)  When the item has been misplaced in the stockroom 
A)  When the record shows a near maximum balance on hand 
B)  When the record shows positive balance but a backorder was written 
C)  When quality problems have been discovered with the item 
D)  When the item has become obsolete 
E)  When the item has been misplaced in the stockroom

Question 5

ABC inventory classification schemes divide inventory items into three groupings. What are these groupings usually based upon?

Accepted Answer

A)  Unit cost 
B)  Lead time 
C)  Criticality 
D)  Weight 
E)  Dollar volume 
A)  Unit cost 
B)  Lead time 
C)  Criticality 
D)  Weight 
E)  Dollar volume

Question 6

The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

Accepted Answer

A) True 
 B)False

Question 7

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  50 
B)  100 
C)  400 
D)  1,000 
E)  1,600 
A)  50 
B)  100 
C)  400 
D)  1,000 
E)  1,600

Question 8

Inventory is defined as the stock of any item or resource used in an organization.

Accepted Answer

A) True 
 B)False

Question 9

If annual demand is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Accepted Answer

A)  576 
B)  240 
C)  120.4 
D)  60.56 
E)  56.03 
A)  576 
B)  240 
C)  120.4 
D)  60.56 
E)  56.03

Question 10

Price-break models deal with the fact that the selling price of an item varies with the order size.

Accepted Answer

A) True 
 B)False

Question 11

In making any decision that affects inventory size, which of the following costs do not need to be considered?

Accepted Answer

A)  Holding costs 
B)  Setup costs 
C)  Ordering costs 
D)  Fixed costs 
E)  Shortage costs 
A)  Holding costs 
B)  Setup costs 
C)  Ordering costs 
D)  Fixed costs 
E)  Shortage costs

Question 12

Shortage costs are precise and easy to measure.

Accepted Answer

A) True 
 B)False

Question 13

Using the probability approach we assume that the demand over a period of time is normally distributed.

Accepted Answer

A) True 
 B)False

Question 14

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.

Accepted Answer

A) True 
 B)False

Question 15

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?

Accepted Answer

A)  421 
B)  234 
C)  78 
D)  26 
E)  312 
A)  421 
B)  234 
C)  78 
D)  26 
E)  312

Question 16

Which of the following are fixed-time period inventory models?

Accepted Answer

A)  The EOQ model 
B)  The least cost method 
C)  The Q model 
D)  Periodic system model 
E)  Just-in-time model 
A)  The EOQ model 
B)  The least cost method 
C)  The Q model 
D)  Periodic system model 
E)  Just-in-time model

Question 17

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

Accepted Answer

A) True 
 B)False

Question 18

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

Accepted Answer

A) True 
 B)False

Question 19

You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.

Accepted Answer

A) True 
 B)False

Question 20

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

Accepted Answer

A) True 
 B)False

One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.

Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80, and a holding cost per unit per year of $4?

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

ABC inventory classification schemes divide inventory items into three groupings. What are these groupings usually based upon?

The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

Inventory is defined as the stock of any item or resource used in an organization.

If annual demand is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Price-break models deal with the fact that the selling price of an item varies with the order size.

In making any decision that affects inventory size, which of the following costs do not need to be considered?

Shortage costs are precise and easy to measure.

Using the probability approach we assume that the demand over a period of time is normally distributed.

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?

Which of the following are fixed-time period inventory models?

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

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Strategic Capacity Management

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Exam 11: Inventory Management

One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.

Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80, and a holding cost per unit per year of $4?

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

ABC inventory classification schemes divide inventory items into three groupings. What are these groupings usually based upon?

The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

Inventory is defined as the stock of any item or resource used in an organization.

If annual demand is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Price-break models deal with the fact that the selling price of an item varies with the order size.

In making any decision that affects inventory size, which of the following costs do not need to be considered?

Shortage costs are precise and easy to measure.

Using the probability approach we assume that the demand over a period of time is normally distributed.

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?

Which of the following are fixed-time period inventory models?

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

Operations and Supply Chain Management

Strategy and Sustainability

Forecasting

Strategic Capacity Management

Projects

Manufacturing Processes

Service Processes

Sales and Operations Planning

Material Requirements Planning

Quality Management and Six Sigma

Lean Supply Chains

Global Sourcing and Procurement

Location, Logistics, and Distribution

Filters