Question 1

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

Accepted Answer

A) True 
 B)False

Question 2

In a price break model of lot sizing the lowest cost quantity is always feasible.

Accepted Answer

A) True 
 B)False

Question 3

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand?

Accepted Answer

A)  550 
B)  500 
C)  715 
D)  450 
E)  475 
A)  550 
B)  500 
C)  715 
D)  450 
E)  475

Question 4

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Accepted Answer

A)  Ordering or setup costs are constant 
B)  Inventory holding cost is based on average inventory 
C)  Diminishing returns to scale of holding inventory 
D)  Lead time is constant 
E)  Demand for the product is uniform throughout the period 
A)  Ordering or setup costs are constant 
B)  Inventory holding cost is based on average inventory 
C)  Diminishing returns to scale of holding inventory 
D)  Lead time is constant 
E)  Demand for the product is uniform throughout the period

Question 5

Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.

Accepted Answer

A) True 
 B)False

Question 6

If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Accepted Answer

A)  5,060 
B)  2,320 
C)  2,133 
D)  2,004 
E)  1,866 
A)  5,060 
B)  2,320 
C)  2,133 
D)  2,004 
E)  1,866

Question 7

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following values for z should we use in as safety stock calculation if we want a service probability of 98%?

Accepted Answer

A)  1.64 
B)  1.96 
C)  2.05 
D)  2.30 
E)  None of these 
A)  1.64 
B)  1.96 
C)  2.05 
D)  2.30 
E)  None of these

Question 9

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Accepted Answer

A)  A items get 15%, B items get 35%, and C items get 50% 
B)  A items get 15%, B items get 45%, and C items get 40% 
C)  A items get 25%, B items get 35%, and C items get 40% 
D)  A items get 25%, B items get 15%, and C items get 60% 
E)  A items get 20%, B items get 30%, and C items get 50% 
A)  A items get 15%, B items get 35%, and C items get 50% 
B)  A items get 15%, B items get 45%, and C items get 40% 
C)  A items get 25%, B items get 35%, and C items get 40% 
D)  A items get 25%, B items get 15%, and C items get 60% 
E)  A items get 20%, B items get 30%, and C items get 50%

Question 10

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model, which of the following must be computed first?

Accepted Answer

A)  Standard deviation of daily demand 
B)  Number of standard deviations for a specific service probability 
C)  Stockout cost 
D)  Economic order quantity 
E)  Safety stock level 
A)  Standard deviation of daily demand 
B)  Number of standard deviations for a specific service probability 
C)  Stockout cost 
D)  Economic order quantity 
E)  Safety stock level

Question 11

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 10 days and the number of days between reviews is 15. Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10?

Accepted Answer

A)  25 
B)  40 
C)  50 
D)  73 
E)  100 
A)  25 
B)  40 
C)  50 
D)  73 
E)  100

Question 12

Using the simple order quantity model in an inventory control problem, Kathy calculated the order quantity to be 1000 units. In a review, she found out that the demand is actually double that of the quantity she had used and the holding cost is only half that of the value she used, The new economic order quantity using the correct data will be:

Accepted Answer

A)  1000 
B)  2000 
C)  1414 
D)  707.1 
E)  cannot be found without other cost information. 
A)  1000 
B)  2000 
C)  1414 
D)  707.1 
E)  cannot be found without other cost information.

Question 13

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

Accepted Answer

A) True 
 B)False

Question 14

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

Accepted Answer

A) True 
 B)False

Question 15

Firms keep supplies of inventory for which of the following reasons?

Accepted Answer

A)  To maintain dependence of operations 
B)  To provide a feeling of security for the workforce 
C)  To meet variation in product demand 
D)  To hedge against wage increases 
E)  In case the supplier changes the design 
A)  To maintain dependence of operations 
B)  To provide a feeling of security for the workforce 
C)  To meet variation in product demand 
D)  To hedge against wage increases 
E)  In case the supplier changes the design

Question 16

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

Accepted Answer

A) True 
 B)False

Question 17

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

Accepted Answer

A) True 
 B)False

Question 18

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

Accepted Answer

A) True 
 B)False

Question 19

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Accepted Answer

A) True 
 B)False

Question 20

What is the basic purpose of inventory analysis?

Accepted Answer

A)  To provide precise inventory valuations when generating accounting records for the firm's annual report. 
B)  Because there are costs for making each new production setup, inventory allows management to reduce the number of setups. 
C)  To provide a safeguard for variation in raw material delivery time. 
D)  To take advantage of economic purchase order size. 
E)  To specify when items should be ordered and how large the order should be. 
A)  To provide precise inventory valuations when generating accounting records for the firm's annual report. 
B)  Because there are costs for making each new production setup, inventory allows management to reduce the number of setups. 
C)  To provide a safeguard for variation in raw material delivery time. 
D)  To take advantage of economic purchase order size. 
E)  To specify when items should be ordered and how large the order should be.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

In a price break model of lot sizing the lowest cost quantity is always feasible.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand?

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.

If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

Which of the following values for z should we use in as safety stock calculation if we want a service probability of 98%?

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model, which of the following must be computed first?

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

Firms keep supplies of inventory for which of the following reasons?

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

What is the basic purpose of inventory analysis?

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Strategic Capacity Management

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Exam 11: Inventory Management

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

In a price break model of lot sizing the lowest cost quantity is always feasible.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand?

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.

If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

Which of the following values for z should we use in as safety stock calculation if we want a service probability of 98%?

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model, which of the following must be computed first?

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

Firms keep supplies of inventory for which of the following reasons?

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

What is the basic purpose of inventory analysis?

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