Question 1

Which one of the following statements is best?

Accepted Answer

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

Question 2

What are the types of inventory from the perspective of how it is created? Where is each type most likely to exist in the supply chain?

Accepted Answer

Inventory takes four forms from this per

Question 3

Scenario 9.3
The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has an estimated annual demand of 8,000 units. Talbot estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year.
-Use the information in Scenario 9.3. The purchasing manager decides that, in order to save purchasing time, orders for the XO-01 will be placed every three months, or four times per year. How much does this approach cost Talbot in total annual holding and ordering costs (instead of Talbot ordering using the EOQ quantity)?

Accepted Answer

A)  greater than $18,000 
B)  greater than $14,000 but less than or equal to $18,000 
C)  greater than $10,000 but less than or equal to $14,000 
D)  less than or equal to $10,000 
A)  greater than $18,000 
B)  greater than $14,000 but less than or equal to $18,000 
C)  greater than $10,000 but less than or equal to $14,000 
D)  less than or equal to $10,000

Question 4

One component of the holding cost of inventory is interest.

Accepted Answer

A) True 
 B)False

Question 5

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. The net impact on the retailer will be:

Accepted Answer

A)  no net change in average cycle and pipeline inventories. 
B)  a net average increase in cycle and pipeline inventories of 50 units. 
C)  a net average decrease in cycle and pipeline inventories of 75 units. 
D)  a net average decrease in cycle and pipeline inventories of 50 units. 
A)  no net change in average cycle and pipeline inventories. 
B)  a net average increase in cycle and pipeline inventories of 50 units. 
C)  a net average decrease in cycle and pipeline inventories of 75 units. 
D)  a net average decrease in cycle and pipeline inventories of 50 units.

Question 6

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 reorder point should the firm use for this product?

Accepted Answer

A)  greater than 0 but less than or equal to 150,000 units 
B)  greater than 150,000 units but less than or equal to 300,000 units 
C)  greater than 300,000 units but less than or equal to 400,000 units 
D)  greater than 400,000 units but less than or equal to 500,000 units 
E)  greater than 500,000 units 
A)  greater than 0 but less than or equal to 150,000 units 
B)  greater than 150,000 units but less than or equal to 300,000 units 
C)  greater than 300,000 units but less than or equal to 400,000 units 
D)  greater than 400,000 units but less than or equal to 500,000 units 
E)  greater than 500,000 units

Question 7

Which of the following does not increase repeatability?

Accepted Answer

A)  parts standardization 
B)  customization 
C)  group technology 
D)  flexible automation 
A)  parts standardization 
B)  customization 
C)  group technology 
D)  flexible automation

Question 8

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 annual setup cost if Geoff follows an EOQ policy to obtain cat food.

Accepted Answer

A)  $112 
B)  $14 
C)  $28 
D)  $56 
A)  $112 
B)  $14 
C)  $28 
D)  $56

Question 9

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

Accepted Answer

A)  the preferred proportion of annual demand instantaneously filled from stock 
B)  the number of stockouts tolerated per year 
C)  the preferred proportion of days in the year when an item is in stock 
D)  the desired probability of not running out of stock in any one inventory cycle 
A)  the preferred proportion of annual demand instantaneously filled from stock 
B)  the number of stockouts tolerated per year 
C)  the preferred proportion of days in the year when an item is in stock 
D)  the desired probability of not running out of stock in any one inventory cycle

Question 10

Which of the following does not generate pressure to increase inventories?

Accepted Answer

A)  transportation costs 
B)  backorders and stockouts 
C)  inventory shrinkage costs 
D)  quantity discounts 
A)  transportation costs 
B)  backorders and stockouts 
C)  inventory shrinkage costs 
D)  quantity discounts

Question 11

Scenario 9.2
Shipments of Product X from a plant to a wholesaler are made in lots of 600. The wholesaler's average demand for X is 100 units per week. The lead time from the plant to the wholesaler is 4 weeks. The wholesaler pays for the shipments when they leave the plant.
-Refer to Scenario 9.2. Which of the following situations results in the wholesaler's total cycle plus pipeline inventories amounting to 550 units?

Accepted Answer

A)  The plant shipment lot size of 400 and plant-to-wholesaler lead time of 2 weeks 
B)  The plant shipment lot size of 500 and plant-to-wholesaler lead time of 3 weeks 
C)  The plant shipment lot size of 400 and plant-to-wholesaler lead time of 3 weeks 
D)  The plant shipment lot size of 600 and plant-to-wholesaler lead time of 4 weeks 
A)  The plant shipment lot size of 400 and plant-to-wholesaler lead time of 2 weeks 
B)  The plant shipment lot size of 500 and plant-to-wholesaler lead time of 3 weeks 
C)  The plant shipment lot size of 400 and plant-to-wholesaler lead time of 3 weeks 
D)  The plant shipment lot size of 600 and plant-to-wholesaler lead time of 4 weeks

Question 12

Which one of the following statements concerning a continuous review system is best?

Accepted Answer

A)  The inventory position (IP) of an item measures the item's ability to satisfy future demand, relying only on the on-hand inventory. 
B)  An item's inventory position under a continuous review system increases by Q units as soon as an order is received. 
C)  An item's on-hand inventory increases by Q units as soon as an order is placed. 
D)  Under a continuous review system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts. 
A)  The inventory position (IP) of an item measures the item's ability to satisfy future demand, relying only on the on-hand inventory. 
B)  An item's inventory position under a continuous review system increases by Q units as soon as an order is received. 
C)  An item's on-hand inventory increases by Q units as soon as an order is placed. 
D)  Under a continuous review system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts.

Question 13

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other item held in stock.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements concerning the economic order quantity (EOQ) model is True?

Accepted Answer

A)  An increase in holding cost will increase the EOQ. 
B)  A decrease in demand will increase the EOQ. 
C)  A decrease in holding cost will increase the EOQ. 
D)  None of the above is True. 
A)  An increase in holding cost will increase the EOQ. 
B)  A decrease in demand will increase the EOQ. 
C)  A decrease in holding cost will increase the EOQ. 
D)  None of the above is True.

Question 15

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.
-Using the information in Scenario 9.9 determine the economic order quantity for cat food.

Accepted Answer

A)  634 cans 
B)  448 cans 
C)  239 cans 
D)  169 cans 
A)  634 cans 
B)  448 cans 
C)  239 cans 
D)  169 cans

Question 16

Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.

Accepted Answer

A) True 
 B)False

Question 17

The ________ determines the frequency and quantity to order.

Accepted Answer

The answer of The ________ determines the frequency and quantity...

Question 18

A(n) ________ system is a system designed to track the remaining inventory of an item each time a withdrawal is made to determine whether to replenish the item.

Accepted Answer

continuous

Question 19

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

Accepted Answer

The answer of ________ is the opportunity cost of investing...

Question 20

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 inventory holding cost if Mwongloa orders using the EOQ quantity?

Accepted Answer

A)  less than or equal to $300 
B)  greater than $300 but less than or equal to $500 
C)  greater than $500 but less than or equal to $700 
D)  greater than $700 
A)  less than or equal to $300 
B)  greater than $300 but less than or equal to $500 
C)  greater than $500 but less than or equal to $700 
D)  greater than $700

Which one of the following statements is best?

What are the types of inventory from the perspective of how it is created? Where is each type most likely to exist in the supply chain?

One component of the holding cost of inventory is interest.

Which of the following does not increase repeatability?

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

Which of the following does not generate pressure to increase inventories?

Which one of the following statements concerning a continuous review system is best?

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other item held in stock.

Which one of the following statements concerning the economic order quantity (EOQ) model is True?

Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.

The ________ determines the frequency and quantity to order.

A(n) ________ system is a system designed to track the remaining inventory of an item each time a withdrawal is made to determine whether to replenish the item.

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

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

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Exam 9: Inventory Management

Which one of the following statements is best?

What are the types of inventory from the perspective of how it is created? Where is each type most likely to exist in the supply chain?

One component of the holding cost of inventory is interest.

Which of the following does not increase repeatability?

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

Which of the following does not generate pressure to increase inventories?

Which one of the following statements concerning a continuous review system is best?

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other item held in stock.

Which one of the following statements concerning the economic order quantity (EOQ) model is True?

Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.

The ________ determines the frequency and quantity to order.

A(n) ________ system is a system designed to track the remaining inventory of an item each time a withdrawal is made to determine whether to replenish the item.

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

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