Question 1

Which of the following is true under the Periodic Review System?

Accepted Answer

A)  a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system 
B)  a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system 
C)  it is more expensive to administer compared to the Continuous Review System 
D)  the only uncertainty is the magnitude of demand during the delivery lead time 
E)  there are no discrepancies between physical inventory and the stock record 
A)  a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system 
B)  a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system 
C)  it is more expensive to administer compared to the Continuous Review System 
D)  the only uncertainty is the magnitude of demand during the delivery lead time 
E)  there are no discrepancies between physical inventory and the stock record

Question 2

The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000.What is the economic order quantity (EOQ)?

Accepted Answer

A)  5 
B)  20 
C)  25 
D)  200 
E)  300 
A)  5 
B)  20 
C)  25 
D)  200 
E)  300

Question 3

MRO supplies are a type of indirect costs.

Accepted Answer

A) True 
 B)False

Question 4

The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C.A items receive the smallest amount of safety stock, while C items typically have the most safety stock.

Accepted Answer

A) True 
 B)False

Question 5

The EOQ model with quantity discounts attempts to determine:

Accepted Answer

A)  the lowest purchasing price. 
B)  whether to use a fixed-quantity or fixed-period order policy. 
C)  how many units should be ordered. 
D)  the shortest lead time to use. 
E)  the lowest amount of inventory necessary to satisfy a certain service level. 
A)  the lowest purchasing price. 
B)  whether to use a fixed-quantity or fixed-period order policy. 
C)  how many units should be ordered. 
D)  the shortest lead time to use. 
E)  the lowest amount of inventory necessary to satisfy a certain service level.

Question 6

When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level.

Accepted Answer

A) True 
 B)False

Question 7

Briefly describe the differences between dependent and independent demand.Provide examples of dependent and independent demand items for each of the following industries: automotive, personal computer, bicycle

Accepted Answer

a.Dependent demand items are those parts

Question 8

MRO supplies are a type of work-in-progress.

Accepted Answer

A) True 
 B)False

Question 9

In the ABC Inventory Matrix shown, inventory in area Y suggests:

Accepted Answer

A)  under-stocked A and B items. 
B)  under-stocked B and C items. 
C)  overstocked A and B items. 
D)  over-stocked B and C items. 
E)  inventory that matches sales. 
A)  under-stocked A and B items. 
B)  under-stocked B and C items. 
C)  overstocked A and B items. 
D)  over-stocked B and C items. 
E)  inventory that matches sales.

Question 10

Use the graph below to answer the questions that follow.
   
a.Identify the Annual Holding Cost curve.Provide a brief description of what the Annual Holding Cost curve represents.
b.Identify the Annual Ordering Cost curve.Provide a brief description of what the Annual Ordering Cost curve represents.
c.Identify the Annual Total Cost Curve.Provide a brief description of what the Annual Total Cost curve represents.
d.Identify the Economic Order Quantity.Provide a brief description of what the Economic Order Quantity represents.

Accepted Answer

a.Identify the Annual Holding Cost curve

Question 11

If an item is ordered using its economic order quantity, the annual carrying cost should be:

Accepted Answer

A)  slightly less than the annual ordering cost. 
B)  equal to the annual ordering cost. 
C)  twice the annual purchase price. 
D)  the square root of the annual ordering cost. 
E)  none of the above. 
A)  slightly less than the annual ordering cost. 
B)  equal to the annual ordering cost. 
C)  twice the annual purchase price. 
D)  the square root of the annual ordering cost. 
E)  none of the above.

Question 12

One of the assumptions of the economic order quantity model (EOQ) is that purchase price must remain constant.

Accepted Answer

A) True 
 B)False

Which of the following is true under the Periodic Review System?

The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000.What is the economic order quantity (EOQ)?

MRO supplies are a type of indirect costs.

The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C.A items receive the smallest amount of safety stock, while C items typically have the most safety stock.

The EOQ model with quantity discounts attempts to determine:

When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level.

Briefly describe the differences between dependent and independent demand.Provide examples of dependent and independent demand items for each of the following industries: automotive, personal computer, bicycle

MRO supplies are a type of work-in-progress.

In the ABC Inventory Matrix shown, inventory in area Y suggests:

If an item is ordered using its economic order quantity, the annual carrying cost should be:

One of the assumptions of the economic order quantity model (EOQ) is that purchase price must remain constant.

Introduction to Supply Chain Management

Purchasing Management

Creating and Managing Supplier Relationships

Ethical and Sustainable Sourcing

Demand Forecasting

Resource Planning Systems

Process Management: Lean and Six Sigma in the Supply Chain

Domestic U.S.and Global Logistics

Customer Relationship Management

Global Location Decisions

Service Response Logistics

Supply Chain Process Integration

Performance Measurement Along the Supply Chain

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Exam 7: Inventory Management

Which of the following is true under the Periodic Review System?

The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000.What is the economic order quantity (EOQ)?

MRO supplies are a type of indirect costs.

The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C.A items receive the smallest amount of safety stock, while C items typically have the most safety stock.

The EOQ model with quantity discounts attempts to determine:

When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level.

Briefly describe the differences between dependent and independent demand.Provide examples of dependent and independent demand items for each of the following industries: automotive, personal computer, bicycle

MRO supplies are a type of work-in-progress.

In the ABC Inventory Matrix shown, inventory in area Y suggests:

If an item is ordered using its economic order quantity, the annual carrying cost should be:

One of the assumptions of the economic order quantity model (EOQ) is that purchase price must remain constant.

Introduction to Supply Chain Management

Purchasing Management

Creating and Managing Supplier Relationships

Ethical and Sustainable Sourcing

Demand Forecasting

Resource Planning Systems

Process Management: Lean and Six Sigma in the Supply Chain

Domestic U.S.and Global Logistics

Customer Relationship Management

Global Location Decisions

Service Response Logistics

Supply Chain Process Integration

Performance Measurement Along the Supply Chain

Filters