Question 1

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

Accepted Answer

A) True 
 B)False

Question 2

In an ABC analysis, class ________ SKUs, which typically make up about ________% of the SKUs, account for only about 15% of the dollar usage.

Accepted Answer

The answer of In an ABC analysis, class ________ SKUs,...

Question 3

Scenario 9.10
The Dolly Llama Farm keeps an average of 50 of those funny creatures on hand and each consumes a pound of grain a day, 365 days per year. Grain costs $12 for a 50 pound bag and it costs the farm $10 to make a run to the feed store to pick up an order, regardless of order size. It takes the feed store four days to acquire, mix, and bag the special blend of grains necessary to make the feed the Dolly Llama Farm prefers. Storage costs for the feed runs 15% of the unit cost as the cost of money, loss due to critters, and spoilage all add up.
-Refer to Scenario 9.10. What should the reorder point be if demand and lead time are invariant and the farm desires a 90% service level?

Accepted Answer

A)  two bags 
B)  four bags 
C)  six bags 
D)  eight bags 
A)  two bags 
B)  four bags 
C)  six bags 
D)  eight bags

Question 4

Scenario 9.9
"Gollee those cats sure go through a lot of food," Geoff exclaimed as he saw the shopping list pad that had been pre-printed with the words "cat food" at the top. He pondered a different approach to shopping for the furry little darlings, reviewed his shopping records, and discovered the following. The price of cat food has held steady at 89 cents per can. Despite feigning indifference, each of the seven cats nibbles their way through an average of one can per day, three hundred sixty five days a year. The price of gasoline has held constant at $3.50 per gallon and his pickup uses a gallon each way to the cat food store. The cost to hold a can of cat food is 10% of the unit price.
-Use the information in Scenario 9.9 to determine the average number of orders per year if Geoff adopts an EOQ policy.

Accepted Answer

A)  3 orders per year 
B)  4 orders per year 
C)  five orders per year 
D)  six orders per year 
A)  3 orders per year 
B)  4 orders per year 
C)  five orders per year 
D)  six orders per year

Question 5

Reducing setup costs will increase the pressure to keep large inventories.

Accepted Answer

A) True 
 B)False

Question 6

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q) is ordered.

Accepted Answer

The answer of The ________ is the predetermined minimum level...

Question 7

Scenario 9.4
The Mwongola Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the "Smooth Shifter", is used for the two most expensive of Burdell's four models, and has an estimated annual demand of 300 units. Burdell estimates the cost to place an order is $40, and the holding cost for each assembly is $60 per year. The company operates 250 days per year.
-Use the information in Scenario 9.4. What is the annual ordering costs if Mwongola orders using the EOQ quantity?

Accepted Answer

A)  less than or equal to $200 
B)  greater than $200 but less than or equal to $350 
C)  greater than $350 but less than or equal to $500 
D)  greater than $500 
A)  less than or equal to $200 
B)  greater than $200 but less than or equal to $350 
C)  greater than $350 but less than or equal to $500 
D)  greater than $500

Question 8

ABC analysis is closely related to:

Accepted Answer

A)  three-bin analysis. 
B)  EOQ analysis. 
C)  repeatability analysis. 
D)  Pareto analysis. 
A)  three-bin analysis. 
B)  EOQ analysis. 
C)  repeatability analysis. 
D)  Pareto analysis.

Question 9

What are the secondary levers for pipeline inventory?

Accepted Answer

The secondary levers for pipeline invent

Question 10

A continuous review system is sometimes called a reorder point system.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following statements is best?

Accepted Answer

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

Question 12

Scenario 9.11
Demand = 50,000 units/week
Standard deviation of weekly demand = 15,000 units
Average lead time = 8 weeks
Standard deviation of lead time: 3 weeks
Cycle-service level = 80%
A continuous review system is used to control inventory.
-Use the information in Scenario 9.11. What is the standard deviation of demand during lead time?

Accepted Answer

A)  greater than 0 but less than or equal to 100,000 units 
B)  greater than 100,000 units but less than or equal to 200,000 units 
C)  greater than 200,000 units but less than or equal to 300,000 units 
D)  greater than 300,000 units 
A)  greater than 0 but less than or equal to 100,000 units 
B)  greater than 100,000 units but less than or equal to 200,000 units 
C)  greater than 200,000 units but less than or equal to 300,000 units 
D)  greater than 300,000 units

Question 13

What are the three types of inventory? For which inventory type is a stockout most critical?

Accepted Answer

The types of inventory discuss

Question 14

Scenario 9.1
Shipments of Product A from a distribution center to a retailer are made in lots of 350. The retailer's average demand for Product A is 75 units per week. The lead time from distributor to retailer is 3 weeks. The retailer pays for the shipments when they leave the distributor. The distributor has agreed to reduce the lead time to 2 weeks if the retailer will purchase quantities of 400 per shipment instead of 350 units per shipment.
-Refer to Scenario 9.1. With the change in lead time, the pipeline inventory will:

Accepted Answer

A)  decrease by 75 units. 
B)  increase by 50 units. 
C)  decrease by 25 units. 
D)  increase by 25 units. 
A)  decrease by 75 units. 
B)  increase by 50 units. 
C)  decrease by 25 units. 
D)  increase by 25 units.

Question 15

Scenario 9.7
Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year.
-Use the information in Scenario 9.7. What combination of changes in lead-time and service level would result in exactly the same level of safety stock as indicated in the table?

Accepted Answer

A)  Lead-time drops to 41 days and service level increases to 99%. 
B)  Lead-time increases to 18.52 days and service level drops to 92%. 
C)  Lead-time increases to 20.54 days and service level drops to 90%. 
D)  Lead-time drops to 3.5 days and service level increases to 99.54%. 
A)  Lead-time drops to 41 days and service level increases to 99%. 
B)  Lead-time increases to 18.52 days and service level drops to 92%. 
C)  Lead-time increases to 20.54 days and service level drops to 90%. 
D)  Lead-time drops to 3.5 days and service level increases to 99.54%.

Question 16

Table 9.1
Inventory records show the following:
  
-What is generally True about class A SKUs in ABC analysis? They represent about:

Accepted Answer

A)  50 percent of all SKUs. 
B)  80 percent of all SKUs. 
C)  20 percent of the dollar usage. 
D)  80 percent of the dollar usage. 
A)  50 percent of all SKUs. 
B)  80 percent of all SKUs. 
C)  20 percent of the dollar usage. 
D)  80 percent of the dollar usage.

Question 17

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

Accepted Answer

The answer of ________ inventory is the portion of total...

Question 18

________ are orders that have been placed but not yet received.

Accepted Answer

Scheduled

Question 19

Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.

Accepted Answer

A) True 
 B)False

Question 20

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

Accepted Answer

A) True 
 B)False

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

In an ABC analysis, class SKUs, which typically make up about % of the SKUs, account for only about 15% of the dollar usage.

Reducing setup costs will increase the pressure to keep large inventories.

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q) is ordered.

ABC analysis is closely related to:

What are the secondary levers for pipeline inventory?

A continuous review system is sometimes called a reorder point system.

Which one of the following statements is best?

What are the three types of inventory? For which inventory type is a stockout most critical?

Table 9.1 Inventory records show the following: -What is generally True about class A SKUs in ABC analysis? They represent about:

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

________ are orders that have been placed but not yet received.

Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Supplement A Decision Making

Supplement J Operations Scheduling

Supplement K Layout

Supplement B Waiting Lines

Supplement C Special Inventory Models

Supplement D Linear Programming

Supplement E Simulation

Supplement F Financial Analysis

Supplement G Acceptance Sampling Plans

Supplement H Measuring Output Rates

Supplement I Learning Curve Analysis

Filters

Exam 9: Inventory Management

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

In an ABC analysis, class ________ SKUs, which typically make up about ________% of the SKUs, account for only about 15% of the dollar usage.

Reducing setup costs will increase the pressure to keep large inventories.

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q) is ordered.

ABC analysis is closely related to:

What are the secondary levers for pipeline inventory?

A continuous review system is sometimes called a reorder point system.

Which one of the following statements is best?

What are the three types of inventory? For which inventory type is a stockout most critical?

Table 9.1 Inventory records show the following: -What is generally True about class A SKUs in ABC analysis? They represent about:

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

________ are orders that have been placed but not yet received.

Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Supplement A Decision Making

Supplement J Operations Scheduling

Supplement K Layout

Supplement B Waiting Lines

Supplement C Special Inventory Models

Supplement D Linear Programming

Supplement E Simulation

Supplement F Financial Analysis

Supplement G Acceptance Sampling Plans

Supplement H Measuring Output Rates

Supplement I Learning Curve Analysis

Filters

In an ABC analysis, class SKUs, which typically make up about % of the SKUs, account for only about 15% of the dollar usage.