Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

A company has recorded the last six days of daily demand on a single product it sells. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?

Accepted Answer

A)  540 
B)  270 
C)  115 
D)  90 
E)  60 
A)  540 
B)  270 
C)  115 
D)  90 
E)  60

Question 3

A Q-model requires more record keeping than a P-model.

Accepted Answer

A) True 
 B)False

Question 4

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Accepted Answer

A) True 
 B)False

Question 5

A company has recorded the last five days of daily demand on its only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?

Accepted Answer

A)  120 
B)  126 
C)  630 
D)  950 
E)  1,200 
A)  120 
B)  126 
C)  630 
D)  950 
E)  1,200

Question 6

Which of the following is a fixed-order-quantity inventory model?

Accepted Answer

A)  Economic order quantity model 
B)  The ABC model 
C)  Periodic replenishment model 
D)  Cycle counting model 
E)  P model 
A)  Economic order quantity model 
B)  The ABC model 
C)  Periodic replenishment model 
D)  Cycle counting model 
E)  P model

Question 7

Which of the following is one of the categories of manufacturing inventory?

Accepted Answer

A)  Economic order inventory 
B)  Work-in-process 
C)  Quality units 
D)  JIT inventory 
E)  Reorder point 
A)  Economic order inventory 
B)  Work-in-process 
C)  Quality units 
D)  JIT inventory 
E)  Reorder point

Question 8

A company wants to determine its reorder point (R). Demand is variable and the company wants 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 9

Manufacturing inventory is the materials that companies need to run their factories.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Accepted Answer

A)  Forecast average daily demand 
B)  Safety stock 
C)  Inventory currently on hand 
D)  Ordering cost 
E)  Lead time in days 
A)  Forecast average daily demand 
B)  Safety stock 
C)  Inventory currently on hand 
D)  Ordering cost 
E)  Lead time in days

Question 11

Fixed-order quantity inventory models are "time triggered."

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Safety stock is not necessary in any fixed-time period system.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 $120 and the loss resulting from that unit if it is not sold (Co.) is $360, which of the following is the probability of the last unit being sold?

Accepted Answer

A)  Greater than 0.90 
B)  Greater than 0.85 
C)  Greater than 0.75 
D)  Greater than 0.25 
E)  None of these choices are correct 
A)  Greater than 0.90 
B)  Greater than 0.85 
C)  Greater than 0.75 
D)  Greater than 0.25 
E)  None of these choices are correct

Question 16

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 17

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

Accepted Answer

A) True 
 B)False

Question 18

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 19

If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  About 2.16 
B)  About 3.06 
C)  About 4.66 
D)  About 5.34 
E)  About 9.30 
A)  About 2.16 
B)  About 3.06 
C)  About 4.66 
D)  About 5.34 
E)  About 9.30

Question 20

Setup and production change costs are different costs.

Accepted Answer

A) True 
 B)False

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

A Q-model requires more record keeping than a P-model.

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Which of the following is a fixed-order-quantity inventory model?

Which of the following is one of the categories of manufacturing inventory?

Manufacturing inventory is the materials that companies need to run their factories.

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Fixed-order quantity inventory models are "time triggered."

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

Safety stock is not necessary in any fixed-time period system.

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

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

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

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

If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

Setup and production change costs are different costs.

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

Exam 20: Inventory Management

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

A Q-model requires more record keeping than a P-model.

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Which of the following is a fixed-order-quantity inventory model?

Which of the following is one of the categories of manufacturing inventory?

Manufacturing inventory is the materials that companies need to run their factories.

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Fixed-order quantity inventory models are "time triggered."

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

Safety stock is not necessary in any fixed-time period system.

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

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

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

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

If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

Setup and production change costs are different costs.

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