Question 1

Customer orders waiting to be processed are called ______ .

Accepted Answer

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

Question 2

______ is the lot size that minimizes total annual inventory holding and ordering costs.

Accepted Answer

The answer of ______ is the lot size that minimizes...

Question 3

Safety stock is only used in continuous review (Q) inventory systems, not in periodic review (P) inventory systems.

Accepted Answer

A) True 
 B)False

Question 4

In a periodic review (P) inventory system, the lot size ordered may change from one order to the next but the time between orders is fixed.

Accepted Answer

A) True 
 B)False

Question 5

Inventory ______ cost is the variable cost of keeping items on hand, including interest, storage and handling, taxes, insurance, and shrinkage.

Accepted Answer

The answer of Inventory ______ cost is the variable cost...

Question 6

One component of the ordering cost of inventory is shrinkage.

Accepted Answer

A) True 
 B)False

Question 7

Safety stock inventory is the portion of total inventory that varies directly with lot size.

Accepted Answer

A) True 
 B)False

Question 8

Table $5.1$
Fred Jacobs, assistant manager of Home and Hearth, is reviewing the costs associated with the store's best-selling frying pan. The data available to Mr. Jacobs concerning this frying pan follow.

-Use the information in Table 5.1 The current order quantity is 125 units per order. What is the total annual ordering cost and holding cost for this order size?

Accepted Answer

A)  less than or equal to $750 
B)  greater than $750 but less than or equal to $1000 
C)  greater than $1000 but less than or equal to $1250 
D)  greater than $1250 
A)  less than or equal to $750 
B)  greater than $750 but less than or equal to $1000 
C)  greater than $1000 but less than or equal to $1250 
D)  greater than $1250

Question 9

______ inventory is inventory used to absorb uneven rates of demand or supply.

Accepted Answer

The answer of ______ inventory is inventory used to absorb...

Question 10

Which one of the following statements is best?

Accepted Answer

A)  AP system lends itself more to quantity discounts than does a Q system. 
B)  In a periodic review system, the value of Q is kept the same from one cycle to another. 
C)  AP system requires more administrative control and computer support than does a Q system. 
D)  AP system requires more safety stock than a Q system. 
A)  AP system lends itself more to quantity discounts than does a Q system. 
B)  In a periodic review system, the value of Q is kept the same from one cycle to another. 
C)  AP system requires more administrative control and computer support than does a Q system. 
D)  AP system requires more safety stock than a Q system.

Question 11

______ is the cost of preparing a purchase order for a supplier or a production order for the shop.

Accepted Answer

The answer of ______ is the cost of preparing a...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Cynthia Korinsky, manager of a large medical supply house that operates 50 weeks per year and 5 days per week, has decided to implement a periodic review system for all class A items. One such item has the following characteristics: 
Demand $= 10,000$ units/year (or 40 units per workday) 
Order cost$= \$ 50 /$ order
Holding cost $= \$ 5 /$ unit/year 
If Korinsky wishes to minimize total cost (thereby approximating the EOQ), what should be P, the number of workdays between orders?

Accepted Answer

A)  less than or equal to 10 days 
B)  greater than 10 days but less than or equal to 12 days 
C)  greater than 12 days but less than or equal to 14 days 
D)  greater than 14 days 
A)  less than or equal to 10 days 
B)  greater than 10 days but less than or equal to 12 days 
C)  greater than 12 days but less than or equal to 14 days 
D)  greater than 14 days

Question 14

Which statement regarding special items is FALSE?

Accepted Answer

A)  just enough of the item is ordered or processed to cover the latest customer request 
B)  less likely than a standard item to have finished goods inventory 
C)  more likely than a standard item to have finished goods inventory 
D)  an item that is made to order or, if purchased, bought to order 
A)  just enough of the item is ordered or processed to cover the latest customer request 
B)  less likely than a standard item to have finished goods inventory 
C)  more likely than a standard item to have finished goods inventory 
D)  an item that is made to order or, if purchased, bought to order

Question 15

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:

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 16

One of the secondary levers for reducing anticipation inventory is to

Accepted Answer

A)  accept only large orders. 
B)  add products with alternating demand cycles. 
C)  keep nonperishable product. 
D)  reduce holding cost. 
A)  accept only large orders. 
B)  add products with alternating demand cycles. 
C)  keep nonperishable product. 
D)  reduce holding cost.

Question 17

The secondary levers for decoupling inventory emphasize

Accepted Answer

A)  better coordination and adjusting the output rate of individual operations. 
B)  all aspects of uncertainty found in the demand, supply, delivery, and operations. 
C)  finding more responsive suppliers and carriers for shipments between stocking locations. 
D)  level customer demand by offering seasonal pricing plans. 
A)  better coordination and adjusting the output rate of individual operations. 
B)  all aspects of uncertainty found in the demand, supply, delivery, and operations. 
C)  finding more responsive suppliers and carriers for shipments between stocking locations. 
D)  level customer demand by offering seasonal pricing plans.

Question 18

Table $5.3$
The Medfield Import Autoparts Company imports and sells standard air filters for most Japanese cars, and it operates under the continuous review system. The average demand for this item is 1200 units per month $( 14,400$ per year), and the standard deviation in monthly demand is 250 units. It costs the company $\$ 225$ to process each order, and the lead time is 2 months. The holding cost for one unit is $\$ 0.50$ per year, and the company policy is to maintain a 95 percent cycle- service level. You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.3. What is the reorder point R if the cycle- service level is brought down to 80 percent?

Accepted Answer

A)  less than or equal to 2800 units 
B)  greater than 2800 units but less than or equal to 2900 units 
C)  greater than 2900 units but less than or equal to 3000 units 
D)  greater than 3000 
A)  less than or equal to 2800 units 
B)  greater than 2800 units but less than or equal to 2900 units 
C)  greater than 2900 units but less than or equal to 3000 units 
D)  greater than 3000

Question 19

Which one of the following statements is best?

Accepted Answer

A)  When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles. 
B)  The level of safety stock maintained decreases when the desired cycle- service level increases. 
C)  The level of safety stock maintained is greater if mean absolute deviation (MA
D)  is used rather than standard deviation in estimating forecast errors. 
D)  The level of safety stock maintained decreases when the standard deviation of demand during lead time increases. 
A)  When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles. 
B)  The level of safety stock maintained decreases when the desired cycle- service level increases. 
C)  The level of safety stock maintained is greater if mean absolute deviation (MA
D)  is used rather than standard deviation in estimating forecast errors. 
D)  The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.

Question 20

The desired probability of not running out of stock in any one order cycle is referred to as the

Accepted Answer

A)  cycle- service level. 
B)  order fill rate. 
C)  safety stock. 
D)  reorder point. 
A)  cycle- service level. 
B)  order fill rate. 
C)  safety stock. 
D)  reorder point.

Customer orders waiting to be processed are called ______ .

______ is the lot size that minimizes total annual inventory holding and ordering costs.

Safety stock is only used in continuous review (Q) inventory systems, not in periodic review (P) inventory systems.

In a periodic review (P) inventory system, the lot size ordered may change from one order to the next but the time between orders is fixed.

Inventory ______ cost is the variable cost of keeping items on hand, including interest, storage and handling, taxes, insurance, and shrinkage.

One component of the ordering cost of inventory is shrinkage.

Safety stock inventory is the portion of total inventory that varies directly with lot size.

______ inventory is inventory used to absorb uneven rates of demand or supply.

Which one of the following statements is best?

______ is the cost of preparing a purchase order for a supplier or a production order for the shop.

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

Which statement regarding special items is FALSE?

One of the secondary levers for reducing anticipation inventory is to

The secondary levers for decoupling inventory emphasize

Which one of the following statements is best?

The desired probability of not running out of stock in any one order cycle is referred to as the

Creating Customer Value

Supply Chain Management

Supply Chain Sustainability and Humanitarian Logistics

Process Configuration

Capacity

Inventory Management

Quality and Process Improvement

Lean Systems

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Filters

Exam 6: Waiting Lines

Customer orders waiting to be processed are called ______ .

______ is the lot size that minimizes total annual inventory holding and ordering costs.

Safety stock is only used in continuous review (Q) inventory systems, not in periodic review (P) inventory systems.

In a periodic review (P) inventory system, the lot size ordered may change from one order to the next but the time between orders is fixed.

Inventory ______ cost is the variable cost of keeping items on hand, including interest, storage and handling, taxes, insurance, and shrinkage.

One component of the ordering cost of inventory is shrinkage.

Safety stock inventory is the portion of total inventory that varies directly with lot size.

______ inventory is inventory used to absorb uneven rates of demand or supply.

Which one of the following statements is best?

______ is the cost of preparing a purchase order for a supplier or a production order for the shop.

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

Which statement regarding special items is FALSE?

One of the secondary levers for reducing anticipation inventory is to

The secondary levers for decoupling inventory emphasize

Which one of the following statements is best?

The desired probability of not running out of stock in any one order cycle is referred to as the

Creating Customer Value

Supply Chain Management

Supply Chain Sustainability and Humanitarian Logistics

Process Configuration

Capacity

Inventory Management

Quality and Process Improvement

Lean Systems

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Filters