Question 1

Most inventory models attempt to minimize:

Accepted Answer

A)  the likelihood of a stockout. 
B)  the number of items ordered. 
C)  total inventory-based costs. 
D)  the number of orders placed. 
E)  the safety stock. 
A)  the likelihood of a stockout. 
B)  the number of items ordered. 
C)  total inventory-based costs. 
D)  the number of orders placed. 
E)  the safety stock.

Question 2

One advantage of cycle counting is that it maintains accurate inventory records.

Accepted Answer

A) True 
 B)False

Question 3

A newspaper boy is trying to perfect his business in order to maximize the money he can save for a new car. Daily paper sales are normally distributed, with a mean of 100 and standard deviation of 10. He sells papers for $0.50 and pays $0.30 for them. Unsold papers are trashed with no salvage value. How many papers should he order each day and what % of the time will he experience a stockout? Are there any drawbacks to the order size proposed and how could the boy address such issues?

Accepted Answer

Service level = Cs/(Cs + Co) = .2/(.2+.3

Question 4

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next five years that will disrupt all suppliers as 0.23%. In addition, the firm currently uses three suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next five years to be 1.1%. What is the probability that all three suppliers will be disrupted at the same time at some point during the next five years?

Accepted Answer

A)  4.4203% 
B)  0.2301% 
C)  4.4300% 
D)  0.2297% 
E)  0.2303% 
A)  4.4203% 
B)  0.2301% 
C)  4.4300% 
D)  0.2297% 
E)  0.2303%

Question 5

Firms often use multiple suppliers for important components to mitigate the risks of total supply disruption.

Accepted Answer

A) True 
 B)False

Question 6

________ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

Accepted Answer

The answer of ________ is a method for dividing on-hand...

Question 7

When quantity discounts are allowed, the cost-minimizing order quantity:

Accepted Answer

A)  is always an EOQ quantity. 
B)  minimizes the sum of holding and ordering costs. 
C)  minimizes the unit purchase price. 
D)  may be a quantity below that at which one qualifies for that price. 
E)  minimizes the sum of holding, ordering, and product costs. 
A)  is always an EOQ quantity. 
B)  minimizes the sum of holding and ordering costs. 
C)  minimizes the unit purchase price. 
D)  may be a quantity below that at which one qualifies for that price. 
E)  minimizes the sum of holding, ordering, and product costs.

Question 8

A bullwhip measure value greater than zero indicates that the bullwhip effect exists.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following should be higher in P systems than Q systems?

Accepted Answer

A)  lead time 
B)  demand 
C)  order size 
D)  order spacing 
E)  safety stock 
A)  lead time 
B)  demand 
C)  order size 
D)  order spacing 
E)  safety stock

Question 10

Cycle counting is an inventory control technique exclusively used for cyclical items.

Accepted Answer

A) True 
 B)False

Question 11

If a safety stock problem includes parameters for average daily demand, standard deviation of demand, and lead time, then ________ is variable and ________ is constant.

Accepted Answer

The answer of If a safety stock problem includes parameters...

Question 12

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $400. What is the inventory carrying cost per unit per year for this item?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $150.00 
E)  not enough data to determine 
A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $150.00 
E)  not enough data to determine

Question 13

Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level?

Accepted Answer

A)  0.5 
B)  0 
C)  0.07 
D)  1 
E)  unable to determine given only the above information 
A)  0.5 
B)  0 
C)  0.07 
D)  1 
E)  unable to determine given only the above information

Question 14

The items listed below are stored in a one-dock warehouse. In what order should they be placed in the warehouse (moving from closest to the dock to furthest away from the dock)?

Accepted Answer

A)  C-E-A-B-D 
B)  E-A-C-B-D 
C)  E-C-A-B-D 
D)  E-A-B-C-D 
E)  D-C-B-A-E 
A)  C-E-A-B-D 
B)  E-A-C-B-D 
C)  E-C-A-B-D 
D)  E-A-B-C-D 
E)  D-C-B-A-E

Question 15

Which of the following is NOT one of the four main types of inventory?

Accepted Answer

A)  raw material inventory 
B)  work-in-process inventory 
C)  maintenance/repair/operating supply inventory 
D)  safety stock inventory 
E)  finished-goods inventory 
A)  raw material inventory 
B)  work-in-process inventory 
C)  maintenance/repair/operating supply inventory 
D)  safety stock inventory 
E)  finished-goods inventory

Question 16

What value of the bullwhip measure would indicate that the bullwhip effect exists?

Accepted Answer

A)  greater than 1 
B)  greater than 0 
C)  less than 0 
D)  less than 1 
E)  1 
A)  greater than 1 
B)  greater than 0 
C)  less than 0 
D)  less than 1 
E)  1

Question 17

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

Accepted Answer

warehouse

Question 18

What is the formula for the bullwhip measure?

Accepted Answer

A)  variance of orders / variance of demand 
B)  variance of orders - variance of demand 
C)  variance of demand / variance of orders 
D)  variance of orders2 / variance of demand2 
E)  variance of demand - variance of orders 
A)  variance of orders / variance of demand 
B)  variance of orders - variance of demand 
C)  variance of demand / variance of orders 
D)  variance of orders2 / variance of demand2 
E)  variance of demand - variance of orders

Question 19

Major retailers lose ________ of overall profits due to poor or inaccurate inventory records.

Accepted Answer

A)  1% to 3% 
B)  3% to 5% 
C)  5% to 10% 
D)  10% to 25% 
E)  50% 
A)  1% to 3% 
B)  3% to 5% 
C)  5% to 10% 
D)  10% to 25% 
E)  50%

Question 20

Cycle counting:

Accepted Answer

A)  is a process by which inventory records are verified once a year. 
B)  eliminates annual inventory adjustments. 
C)  provides a measure of inventory turnover. 
D)  assumes that all inventory records must be verified with the same frequency. 
E)  assumes that the most frequently used items must be counted more frequently. 
A)  is a process by which inventory records are verified once a year. 
B)  eliminates annual inventory adjustments. 
C)  provides a measure of inventory turnover. 
D)  assumes that all inventory records must be verified with the same frequency. 
E)  assumes that the most frequently used items must be counted more frequently.

Exam 11: Inventory Management

Most inventory models attempt to minimize:

One advantage of cycle counting is that it maintains accurate inventory records.

Firms often use multiple suppliers for important components to mitigate the risks of total supply disruption.

________ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

When quantity discounts are allowed, the cost-minimizing order quantity:

A bullwhip measure value greater than zero indicates that the bullwhip effect exists.

Which of the following should be higher in P systems than Q systems?

Cycle counting is an inventory control technique exclusively used for cyclical items.

If a safety stock problem includes parameters for average daily demand, standard deviation of demand, and lead time, then ________ is variable and ________ is constant.

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $400. What is the inventory carrying cost per unit per year for this item?

Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level?

The items listed below are stored in a one-dock warehouse. In what order should they be placed in the warehouse (moving from closest to the dock to furthest away from the dock)?

Which of the following is NOT one of the four main types of inventory?

What value of the bullwhip measure would indicate that the bullwhip effect exists?

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

What is the formula for the bullwhip measure?

Major retailers lose ________ of overall profits due to poor or inaccurate inventory records.

Cycle counting:

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Process Strategies

Location Strategies

Human Resources, Job Design, and Work Measurement

Supply Chain Management

Aggregate Planning and Sop

Material Requirements Planning Mrp and Erp

Short-Term Scheduling

Lean Operations

Maintenance and Reliability

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Applying Analytics to Big Data in Operations Management

Filters

If a safety stock problem includes parameters for average daily demand, standard deviation of demand, and lead time, then is variable and is constant.