Question 1

When there is probabilistic demand in a multi-period model, the inventory level will not decrease smoothly and can fall below 0.

Accepted Answer

A) True 
 B)False

Question 2

In the single-period inventory model with probabilistic demand,

Accepted Answer

A)  surplus items are not allowed to be carried in future inventory. 
B)  co = cu. 
C)  probabilities are used to calculate expected losses. 
D)  All of the alternatives are correct. 
A)  surplus items are not allowed to be carried in future inventory. 
B)  co = cu. 
C)  probabilities are used to calculate expected losses. 
D)  All of the alternatives are correct.

Question 3

The terms "inventory on hand" and "inventory position" have the same meaning.

Accepted Answer

A) True 
 B)False

Question 4

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

Accepted Answer

A)  An entire order quantity arrives at one time. 
B)  The previous order quantity is entirely depleted when the next order arrives. 
C)  An order quantity is depleted at a uniform rate over time. 
D)  Backorders are permitted. 
A)  An entire order quantity arrives at one time. 
B)  The previous order quantity is entirely depleted when the next order arrives. 
C)  An order quantity is depleted at a uniform rate over time. 
D)  Backorders are permitted.

Question 6

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

Accepted Answer

A) True 
 B)False

Question 7

The single-period inventory model is most applicable to items that are perishable or have seasonal demand.

Accepted Answer

A) True 
 B)False

Question 8

The definition of service level used in this chapter is

Accepted Answer

A)  the percentage of all demand that can be satisfied from inventory. 
B)  the percentage of all order cycles that do not experience a stockout. 
C)  the percentage of demand during the lead-time period that can be satisfied from inventory 
D)  None of the alternatives is correct. 
A)  the percentage of all demand that can be satisfied from inventory. 
B)  the percentage of all order cycles that do not experience a stockout. 
C)  the percentage of demand during the lead-time period that can be satisfied from inventory 
D)  None of the alternatives is correct.

Question 9

Inventory position is defined as

Accepted Answer

A)  the amount of inventory on hand in excess of expected demand. 
B)  the amount of inventory on hand. 
C)  the amount of inventory on hand plus the amount of inventory on order. 
D)  None of the alternatives is correct. 
A)  the amount of inventory on hand in excess of expected demand. 
B)  the amount of inventory on hand. 
C)  the amount of inventory on hand plus the amount of inventory on order. 
D)  None of the alternatives is correct.

Question 10

The cost of overestimating demand is usually harder to determine than the cost of underestimating demand.

Accepted Answer

A) True 
 B)False

Question 11

Chez Paul Restaurant orders special Styrofoam "doggy bags" for its customers once a month and lead time is one week. Weekly demand for doggy bags is approximately normally distributed with an average of 120 bags and a standard deviation of 25. Chez Paul wants at most a 3% chance of running out of doggy bags during the replenishment period. If he has 150 bags in stock when he places an order, how many additional bags should he order? What is the safety stock in this case?

Accepted Answer

Order 555

Question 12

The economic production lot size model is appropriate when

Accepted Answer

A)  demand exceeds the production rate. 
B)  there is a constant supply rate for every period, without pause. 
C)  ordering cost is equivalent to the production setup cost. 
D)  All of the alternatives are correct. 
A)  demand exceeds the production rate. 
B)  there is a constant supply rate for every period, without pause. 
C)  ordering cost is equivalent to the production setup cost. 
D)  All of the alternatives are correct.

Question 13

When quantity discounts are available, order an amount from the highest discount category.

Accepted Answer

A) True 
 B)False

Question 14

The EOQ model

Accepted Answer

A)  determines only how frequently to order. 
B)  considers total cost. 
C)  minimizes both ordering and holding costs. 
D)  All of the alternatives are correct. 
A)  determines only how frequently to order. 
B)  considers total cost. 
C)  minimizes both ordering and holding costs. 
D)  All of the alternatives are correct.

Question 15

When the reorder point r exceeds Q*, the difference is

Accepted Answer

A)  safety stock 
B)  one or more outstanding orders 
C)  surplus inventory 
D)  backorders 
A)  safety stock 
B)  one or more outstanding orders 
C)  surplus inventory 
D)  backorders

Question 16

To be considered as inventory, goods must be finished and waiting for delivery.

Accepted Answer

A) True 
 B)False

Question 17

For the EOQ model, cycle time is the time between

Accepted Answer

A)  placing successive orders 
B)  placing and receiving an order 
C)  stocking out and receiving an order 
D)  receiving and storing an order 
A)  placing successive orders 
B)  placing and receiving an order 
C)  stocking out and receiving an order 
D)  receiving and storing an order

Question 18

In the EOQ model, the average inventory per cycle over many cycles is Q/2.

Accepted Answer

A) True 
 B)False

Question 19

When demand is independent, it is not related to demand for other components or items produced by the firm.

Accepted Answer

A) True 
 B)False

Question 20

Which cost would not be considered part of a holding cost?

Accepted Answer

A)  cost of capital 
B)  shipping cost 
C)  insurance cost 
D)  warehouse overhead 
A)  cost of capital 
B)  shipping cost 
C)  insurance cost 
D)  warehouse overhead

When there is probabilistic demand in a multi-period model, the inventory level will not decrease smoothly and can fall below 0.

In the single-period inventory model with probabilistic demand,

The terms "inventory on hand" and "inventory position" have the same meaning.

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

The single-period inventory model is most applicable to items that are perishable or have seasonal demand.

The definition of service level used in this chapter is

Inventory position is defined as

The cost of overestimating demand is usually harder to determine than the cost of underestimating demand.

The economic production lot size model is appropriate when

When quantity discounts are available, order an amount from the highest discount category.

The EOQ model

When the reorder point r exceeds Q*, the difference is

To be considered as inventory, goods must be finished and waiting for delivery.

For the EOQ model, cycle time is the time between

In the EOQ model, the average inventory per cycle over many cycles is Q/2.

When demand is independent, it is not related to demand for other components or items produced by the firm.

Which cost would not be considered part of a holding cost?

Introduction

An Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Advanced Linear Programming Applications

Distribution and Network Models

Integer Linear Programming

Nonlinear Optimization Models

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Decision Analysis

Multicriteria Decisions

Forecasting

Markov Processes

Filters

Exam 10: Inventory Models

When there is probabilistic demand in a multi-period model, the inventory level will not decrease smoothly and can fall below 0.

In the single-period inventory model with probabilistic demand,

The terms "inventory on hand" and "inventory position" have the same meaning.

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

The single-period inventory model is most applicable to items that are perishable or have seasonal demand.

The definition of service level used in this chapter is

Inventory position is defined as

The cost of overestimating demand is usually harder to determine than the cost of underestimating demand.

The economic production lot size model is appropriate when

When quantity discounts are available, order an amount from the highest discount category.

The EOQ model

When the reorder point r exceeds Q*, the difference is

To be considered as inventory, goods must be finished and waiting for delivery.

For the EOQ model, cycle time is the time between

In the EOQ model, the average inventory per cycle over many cycles is Q/2.

When demand is independent, it is not related to demand for other components or items produced by the firm.

Which cost would not be considered part of a holding cost?

Introduction

An Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Advanced Linear Programming Applications

Distribution and Network Models

Integer Linear Programming

Nonlinear Optimization Models

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Decision Analysis

Multicriteria Decisions

Forecasting

Markov Processes

Filters