Question 1

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)  Returns to scale of holding inventory are diminishing. 
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)  Returns to scale of holding inventory are diminishing. 
D)  Lead time is constant. 
E)  Demand for the product is uniform throughout the period. C

Question 2

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 B

Question 3

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)  Stock-out 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)  Stock-out cost 
D)  Economic order quantity 
E)  Safety stock level A

Question 4

Which of the following is a perpetual system for inventory management?

Accepted Answer

A)  Fixed-time period 
B)  Fixed-order quantity 
C)  P-model 
D)  First-in-first-out 
E)  The wheel of inventory 
A)  Fixed-time period 
B)  Fixed-order quantity 
C)  P-model 
D)  First-in-first-out 
E)  The wheel of inventory

Question 5

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?

Accepted Answer

A)  1.28 
B)  1.64 
C)  1.96 
D)  2.00 
E)  2.18 
A)  1.28 
B)  1.64 
C)  1.96 
D)  2.00 
E)  2.18

Question 6

Which of the following is not an inventory cost?

Accepted Answer

A)  Holding 
B)  Production change 
C)  Shipping 
D)  Ordering 
E)  Shortage 
A)  Holding 
B)  Production change 
C)  Shipping 
D)  Ordering 
E)  Shortage

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

If it takes a supplier 4 days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  10 
B)  20 
C)  40 
D)  100 
E)  400 
A)  10 
B)  20 
C)  40 
D)  100 
E)  400

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text), and if the profit resulting from the last unit being sold (Cu) is $0.90 and the loss resulting from that unit if it is not sold (Co) is $0.50, which of the following is the probability of the last unit being sold?

Accepted Answer

A)  Greater than 0.357 
B)  Greater than 0.400 
C)  Greater than 0.556 
D)  Greater than 0.678 
E)  None of these choices are correct 
A)  Greater than 0.357 
B)  Greater than 0.400 
C)  Greater than 0.556 
D)  Greater than 0.678 
E)  None of these choices are correct

Question 13

Fixed-time period inventory models are "event triggered."

Accepted Answer

A) True 
 B)False

Question 14

Fixed-time period inventory models are "time triggered."

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Accepted Answer

A)  Annual purchasing cost, annual ordering cost, fixed cost 
B)  Annual holding cost, annual ordering cost, unit cost 
C)  Annual holding cost, annual ordering cost, annual purchasing cost 
D)  Annual lead time cost, annual holding cost, annual purchasing cost 
E)  Annual unit cost, annual setup cost, annual purchasing cost 
A)  Annual purchasing cost, annual ordering cost, fixed cost 
B)  Annual holding cost, annual ordering cost, unit cost 
C)  Annual holding cost, annual ordering cost, annual purchasing cost 
D)  Annual lead time cost, annual holding cost, annual purchasing cost 
E)  Annual unit cost, annual setup cost, annual purchasing cost

Question 17

In-transit inventory is material being moved from suppliers to customers.

Accepted Answer

A) True 
 B)False

Question 18

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 19

When developing inventory cost models, which of the following is not included as a costs to place an order?

Accepted Answer

A)  Phone calls 
B)  Taxes 
C)  Clerical 
D)  Calculating quantity to order 
E)  Postage 
A)  Phone calls 
B)  Taxes 
C)  Clerical 
D)  Calculating quantity to order 
E)  Postage

Question 20

Demand for organic super fresh lettuce in a local supermarket is 5 with probability 0.2; 6 with probability 0.3; 7 with probability 0.4 or 8 with probability 0.1. Unsold lettuce is given to a food bank with a salvage value of $1.00 per head of lettuce. Cost of the lettuce is $3.00 per unit. Selling price is $6.00 per unit. Using the single-period model, what is the optimal order quantity in number of units of lettuce the supermarket should use?

Accepted Answer

A)  7 
B)  6 
C)  5 
D)  8 
E)  None of these choices are correct 
A)  7 
B)  6 
C)  5 
D)  8 
E)  None of these choices are correct

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

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

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?

Which of the following is a perpetual system for inventory management?

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 is not an inventory cost?

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

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

If it takes a supplier 4 days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time?

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?

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

Fixed-time period inventory models are "event triggered."

Fixed-time period inventory models are "time triggered."

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

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

In-transit inventory is material being moved from suppliers to customers.

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?

When developing inventory cost models, which of the following is not included as a costs to place an order?

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Strategic Capacity Management

Learning Curves

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Service Processes

Waiting Line Analysis and Simulation

Process Design and Analysis

Six Sigma Quality

Statistical Quality Control

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Exam 20: Inventory Management

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

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

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?

Which of the following is a perpetual system for inventory management?

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 is not an inventory cost?

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

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

If it takes a supplier 4 days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time?

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?

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

Fixed-time period inventory models are "event triggered."

Fixed-time period inventory models are "time triggered."

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

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

In-transit inventory is material being moved from suppliers to customers.

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?

When developing inventory cost models, which of the following is not included as a costs to place an order?

Introduction

Strategy

Design of Products and Services

Projects

Strategic Capacity Management

Learning Curves

Manufacturing Processes

Facility Layout

Service Processes

Waiting Line Analysis and Simulation

Process Design and Analysis

Six Sigma Quality

Statistical Quality Control

Lean Supply Chains

Logistics, Distribution, and Transportation

Global Sourcing and Procurement

The Internet of Things and Erp

Forecasting

Sales and Operations Planning

Material Requirements Planning

Workcenter Scheduling

Filters