Question 1

A cycle count program will usually require that Class A items be counted

Accepted Answer

A) daily. 
B) once a week. 
C) monthly. 
D) quarterly. 
E) more often than annually. 
A) daily. 
B) once a week. 
C) monthly. 
D) quarterly. 
E) more often than annually.

Question 2

Which item would be least likely to be ordered under a fixed-order-interval system?

Accepted Answer

A) textbooks at a college bookstore 
B) auto parts at an assembly plant 
C) cards at a gift shop 
D) canned peas at a supermarket 
E) magazines at a news stand 
A) textbooks at a college bookstore 
B) auto parts at an assembly plant 
C) cards at a gift shop 
D) canned peas at a supermarket 
E) magazines at a news stand

Question 3

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Accepted Answer

A) 0. 
B) 0.33. 
C) 0.50. 
D) 0.67. 
E) 0.75. 
A) 0. 
B) 0.33. 
C) 0.50. 
D) 0.67. 
E) 0.75.

Question 4

Which of the following is least likely to be included in order costs?

Accepted Answer

A) processing vendor invoices for payment 
B) processing purchase orders 
C) inspecting incoming goods for quantity 
D) taking an inventory to determine how much is needed 
E) temporary storage of delivered goods 
A) processing vendor invoices for payment 
B) processing purchase orders 
C) inspecting incoming goods for quantity 
D) taking an inventory to determine how much is needed 
E) temporary storage of delivered goods

Question 5

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

Accepted Answer

A) 20 times 2 
B) 20 times 10 
C) 2 times the square root of 20 
D) 2 times the square root of 10 
E) 400 times the square root of 10 
A) 20 times 2 
B) 20 times 10 
C) 2 times the square root of 20 
D) 2 times the square root of 10 
E) 400 times the square root of 10

Question 6

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Accepted Answer

A) True 
 B)False

Question 7

The basic EOQ model ignores the purchasing cost.

Accepted Answer

A) True 
 B)False

Question 8

Understocking an inventory item is a sure sign of inadequate inventory control.

Accepted Answer

A) True 
 B)False

Question 9

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

Accepted Answer

A) A items. 
B) B items. 
C) C items. 
D) A items plus B items. 
E) B items plus C items. 
A) A items. 
B) B items. 
C) C items. 
D) A items plus B items. 
E) B items plus C items.

Question 10

The single-period model can be very helpful in determining when to order.

Accepted Answer

A) True 
 B)False

Question 11

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be theaverage total daily costs, including the cost of the pepperoni?

Accepted Answer

A) $60.00 
B) $63.20 
C) $64.00 
D) $64.10 
E) $65.00 
A) $60.00 
B) $63.20 
C) $64.00 
D) $64.10 
E) $65.00

Question 12

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

Accepted Answer

A) True 
 B)False

Question 13

The fixed-order-interval model would be most likely to be used for this situation

Accepted Answer

A) A company has switched from mass production to lean production. 
B) Production is done in batches. 
C) Spare parts are ordered when a new machine is purchased. 
D) Grouping orders can save shipping costs. 
E) Demand is highly variable 
A) A company has switched from mass production to lean production. 
B) Production is done in batches. 
C) Spare parts are ordered when a new machine is purchased. 
D) Grouping orders can save shipping costs. 
E) Demand is highly variable

Question 14

In the fixed-order-interval model, the order size is the same for each order.

Accepted Answer

A) True 
 B)False

Question 15

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the length of an order cycle?

Accepted Answer

A) 0.48 days 
B) 2.08 days 
C) 6 days 
D) 8.4 days 
E) 14.4 days 
A) 0.48 days 
B) 2.08 days 
C) 6 days 
D) 8.4 days 
E) 14.4 days

Question 16

Decoupling operations means to break the linkage between two sequential operations.

Accepted Answer

A) True 
 B)False

Question 17

In a two-bin inventory system, the amount contained in the second bin is equal to the

Accepted Answer

A) ROP. 
B) EOQ. 
C) amount in the first bin. 
D) optimum stocking level. 
E) safety stock. 
A) ROP. 
B) EOQ. 
C) amount in the first bin. 
D) optimum stocking level. 
E) safety stock.

Question 18

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Accepted Answer

A) 100 units. 
B) 200 units. 
C) 300 units. 
D) 600 units. 
E) 700 units. 
A) 100 units. 
B) 200 units. 
C) 300 units. 
D) 600 units. 
E) 700 units.

Question 19

Which of the following can be calculated by dividing profit after taxes by total assets?

Accepted Answer

A) return on investment 
B) return on equity 
C) return on assets 
D) return on sales 
E) return on invested capital 
A) return on investment 
B) return on equity 
C) return on assets 
D) return on sales 
E) return on invested capital

Question 20

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, at what point should bills be reordered?

Accepted Answer

A) 0 bills remaining 
B) 417 bills remaining 
C) 2,500 bills remaining 
D) 10,000 bills remaining 
E) 12,500 bills remaining 
A) 0 bills remaining 
B) 417 bills remaining 
C) 2,500 bills remaining 
D) 10,000 bills remaining 
E) 12,500 bills remaining

A cycle count program will usually require that Class A items be counted

Which item would be least likely to be ordered under a fixed-order-interval system?

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Which of the following is least likely to be included in order costs?

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

The basic EOQ model ignores the purchasing cost.

Understocking an inventory item is a sure sign of inadequate inventory control.

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

The single-period model can be very helpful in determining when to order.

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

The fixed-order-interval model would be most likely to be used for this situation

In the fixed-order-interval model, the order size is the same for each order.

Decoupling operations means to break the linkage between two sequential operations.

In a two-bin inventory system, the amount contained in the second bin is equal to the

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Which of the following can be calculated by dividing profit after taxes by total assets?

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters

Exam 12: Inventory Management

A cycle count program will usually require that Class A items be counted

Which item would be least likely to be ordered under a fixed-order-interval system?

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Which of the following is least likely to be included in order costs?

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

The basic EOQ model ignores the purchasing cost.

Understocking an inventory item is a sure sign of inadequate inventory control.

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

The single-period model can be very helpful in determining when to order.

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

The fixed-order-interval model would be most likely to be used for this situation

In the fixed-order-interval model, the order size is the same for each order.

Decoupling operations means to break the linkage between two sequential operations.

In a two-bin inventory system, the amount contained in the second bin is equal to the

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Which of the following can be calculated by dividing profit after taxes by total assets?

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters