Question 1

The EOQ model is most relevant for which one of the following?

Accepted Answer

A) ordering items with dependent demand 
B) determination of safety stock 
C) ordering perishable items 
D) determining fixed-interval order quantities 
E) determining fixed order quantities 
A) ordering items with dependent demand 
B) determination of safety stock 
C) ordering perishable items 
D) determining fixed-interval order quantities 
E) determining fixed order quantities

Question 2

The EOQ should be regarded as an approximate quantity rather than an exact quantity. Thus, rounding the calculated value is acceptable.

Accepted Answer

A) True 
 B)False

Question 3

The objective of inventory management is to minimize the cost of holding inventory.

Accepted Answer

A) True 
 B)False

Question 4

What are the two functions that management must be concerned with in regard to inventory?

Accepted Answer

A) estimating costs / developing an inventory counting system 
B) creating accurate forecasts / communicating with the entire supply chain 
C) tracking inventory / developing an operations strategy 
D) establishing a classification system / creating a perpetual inventory system 
E) establishing a system to track items / making decisions about the quantity and when to order 
A) estimating costs / developing an inventory counting system 
B) creating accurate forecasts / communicating with the entire supply chain 
C) tracking inventory / developing an operations strategy 
D) establishing a classification system / creating a perpetual inventory system 
E) establishing a system to track items / making decisions about the quantity and when to order

Question 5

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves

Accepted Answer

A) line up. 
B) equal zero. 
C) do not line up. 
D) cannot be calculated. 
E) depend on the percentage assigned. 
A) line up. 
B) equal zero. 
C) do not line up. 
D) cannot be calculated. 
E) depend on the percentage assigned.

Question 6

In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will

Accepted Answer

A) double. 
B) increase, but not double. 
C) decrease by a factor of 2. 
D) remain the same. 
E) increase, but more information is needed to calculate exactly how much. 
A) double. 
B) increase, but not double. 
C) decrease by a factor of 2. 
D) remain the same. 
E) increase, but more information is needed to calculate exactly how much.

Question 7

All of the following are possible reasons for using the fixed-order-interval model except

Accepted Answer

A) supplier policy encourages use. 
B) grouping orders can save in shipping costs. 
C) the required safety stock is lower than with an EOQ/ROP model. 
D) it is suited to periodic checks of inventory levels rather than continuous monitoring. 
E) continuous monitoring is not practical. 
A) supplier policy encourages use. 
B) grouping orders can save in shipping costs. 
C) the required safety stock is lower than with an EOQ/ROP model. 
D) it is suited to periodic checks of inventory levels rather than continuous monitoring. 
E) continuous monitoring is not practical.

Question 8

Which of the following are not types of inventory?

Accepted Answer

A) customer orders 
B) raw materials 
C) work-in-progress 
D) tools 
E) goods in transit 
A) customer orders 
B) raw materials 
C) work-in-progress 
D) tools 
E) goods in transit

Question 9

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must

Accepted Answer

A) have the lowest total cost. 
B) be in a feasible range. 
C) be to the left of the price break quantity for that price. 
D) have the largest quantity compared to other EOQs. 
E) have smaller ordering costs than the others. 
A) have the lowest total cost. 
B) be in a feasible range. 
C) be to the left of the price break quantity for that price. 
D) have the largest quantity compared to other EOQs. 
E) have smaller ordering costs than the others.

Question 10

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately

Accepted Answer

A) 11. 
B) 20. 
C) 24. 
D) 28. 
E) 375. 
A) 11. 
B) 20. 
C) 24. 
D) 28. 
E) 375.

Question 11

The total cost curve is relatively flat near the EOQ.

Accepted Answer

A) True 
 B)False

Question 12

An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Accepted Answer

A) True 
 B)False

Question 13

Which one of these would not be a factor in determining the reorder point?

Accepted Answer

A) the EOQ 
B) the lead time 
C) the variability of demand 
D) the demand or usage rate 
E) all are factors 
A) the EOQ 
B) the lead time 
C) the variability of demand 
D) the demand or usage rate 
E) all are factors

Question 14

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Accepted Answer

A) True 
 B)False

Question 15

Because price is not a factor in the EOQ formula, quantity discounts will not affect EOQ calculations.

Accepted Answer

A) True 
 B)False

Question 16

Cycle stock inventory is intended to deal with

Accepted Answer

A) excess costs. 
B) shortage costs. 
C) stockouts. 
D) expected demand. 
E) quantity discounts. 
A) excess costs. 
B) shortage costs. 
C) stockouts. 
D) expected demand. 
E) quantity discounts.

Question 17

In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about

Accepted Answer

A) 10. 
B) 30. 
C) 50. 
D) 70. 
E) 90. 
A) 10. 
B) 30. 
C) 50. 
D) 70. 
E) 90.

Question 18

The rate of demand is an important factor in determining the ROP.

Accepted Answer

A) True 
 B)False

Question 19

Which system keeps track of the items removed from inventory in order to provide real-time levels?

Accepted Answer

A) interval 
B) periodic 
C) perpetual 
D) estimated 
E) scheduled 
A) interval 
B) periodic 
C) perpetual 
D) estimated 
E) scheduled

Question 20

Profit margins tend to be inversely related to inventory turns.

Accepted Answer

A) True 
 B)False

The EOQ model is most relevant for which one of the following?

The EOQ should be regarded as an approximate quantity rather than an exact quantity. Thus, rounding the calculated value is acceptable.

The objective of inventory management is to minimize the cost of holding inventory.

What are the two functions that management must be concerned with in regard to inventory?

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves

In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will

All of the following are possible reasons for using the fixed-order-interval model except

Which of the following are not types of inventory?

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately

The total cost curve is relatively flat near the EOQ.

An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Which one of these would not be a factor in determining the reorder point?

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Because price is not a factor in the EOQ formula, quantity discounts will not affect EOQ calculations.

Cycle stock inventory is intended to deal with

In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about

The rate of demand is an important factor in determining the ROP.

Which system keeps track of the items removed from inventory in order to provide real-time levels?

Profit margins tend to be inversely related to inventory turns.

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

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Exam 12: Inventory Management

The EOQ model is most relevant for which one of the following?

The EOQ should be regarded as an approximate quantity rather than an exact quantity. Thus, rounding the calculated value is acceptable.

The objective of inventory management is to minimize the cost of holding inventory.

What are the two functions that management must be concerned with in regard to inventory?

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves

In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will

All of the following are possible reasons for using the fixed-order-interval model except

Which of the following are not types of inventory?

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately

The total cost curve is relatively flat near the EOQ.

An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Which one of these would not be a factor in determining the reorder point?

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Because price is not a factor in the EOQ formula, quantity discounts will not affect EOQ calculations.

Cycle stock inventory is intended to deal with

In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about

The rate of demand is an important factor in determining the ROP.

Which system keeps track of the items removed from inventory in order to provide real-time levels?

Profit margins tend to be inversely related to inventory turns.

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