Question 1

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:

Accepted Answer

A)  safety stock replenishment. 
B)  economic order quantities. 
C)  reorder points. 
D)  fixed order intervals. 
E)  blanket ordering. 
A)  safety stock replenishment. 
B)  economic order quantities. 
C)  reorder points. 
D)  fixed order intervals. 
E)  blanket ordering.

Question 2

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 3

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 4

The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the average daily total inventory costs, EXCLUDING the cost of the beer?

Accepted Answer

A)  $2.00 
B)  $4.00 
C)  $1.28 
D)  $3.28 
E)  $2.56 
A)  $2.00 
B)  $4.00 
C)  $1.28 
D)  $3.28 
E)  $2.56

Question 5

Which of the following is typically the largest of all inventory costs?

Accepted Answer

A)  shortage cost 
B)  purchase cost 
C)  holding cost 
D)  ordering cost 
E)  pipeline cost 
A)  shortage cost 
B)  purchase cost 
C)  holding cost 
D)  ordering cost 
E)  pipeline cost

Question 6

Cycle counting can be used in motorcycle inventory control.

Accepted Answer

A) True 
 B)False

Question 7

Variability in demand and/or lead time can be compensated for by safety stock.

Accepted Answer

A) True 
 B)False

Question 8

In the single-period model, if excess cost is double the shortage cost, the approximate stockout risk, assuming an optimum service level, is ___ percent.

Accepted Answer

A)  100 
B)  67 
C)  50 
D)  33 
E)  5 
A)  100 
B)  67 
C)  50 
D)  33 
E)  5

Question 9

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the maximum inventory would be approximately:

Accepted Answer

A)  70 percent higher. 
B)  30 percent higher. 
C)  the same. 
D)  30 percent lower. 
E)  70 percent lower. 
A)  70 percent higher. 
B)  30 percent higher. 
C)  the same. 
D)  30 percent lower. 
E)  70 percent lower.

Question 10

Safety stock eliminates all stockouts.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The inventory value of the supply chain exceeds the inventory value of the organization's work-in-process inventory.

Accepted Answer

A) True 
 B)False

Question 13

The calculation of safety stock requires knowledge of demand and lead time variability.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not true for the economic production quantity model?

Accepted Answer

A)  Usage rate is constant. 
B)  Production rate exceeds usage rate. 
C)  Run size exceeds maximum inventory. 
D)  There are no ordering or setup costs. 
E)  Average inventory is one-half maximum inventory. 
A)  Usage rate is constant. 
B)  Production rate exceeds usage rate. 
C)  Run size exceeds maximum inventory. 
D)  There are no ordering or setup costs. 
E)  Average inventory is one-half maximum inventory.

Question 15

In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:

Accepted Answer

A)  10. 
B)  12. 
C)  24. 
D)  72. 
E)  144. 
A)  10. 
B)  12. 
C)  24. 
D)  72. 
E)  144.

Question 16

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. At what point should resin be reordered?

Accepted Answer

A)  0 kilograms remaining 
B)  50 kilograms remaining 
C)  200 kilograms remaining 
D)  400 kilograms remaining 
E)  500 kilograms remaining 
A)  0 kilograms remaining 
B)  50 kilograms remaining 
C)  200 kilograms remaining 
D)  400 kilograms remaining 
E)  500 kilograms remaining

Question 17

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

Accepted Answer

A)  20. 
B)  square root of 200. 
C)  200. 
D)  400. 
E)  600. 
A)  20. 
B)  square root of 200. 
C)  200. 
D)  400. 
E)  600.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

Accepted Answer

A) True 
 B)False

Question 20

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

Accepted Answer

A)  It doubles. 
B)  It is four times its previous amount. 
C)  It is half its previous amount. 
D)  It is about 70 percent of its previous amount. 
E)  It increases by about 40 percent. 
A)  It doubles. 
B)  It is four times its previous amount. 
C)  It is half its previous amount. 
D)  It is about 70 percent of its previous amount. 
E)  It increases by about 40 percent.

Exam 18: Inventory Management

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:

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:

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

Which of the following is typically the largest of all inventory costs?

Cycle counting can be used in motorcycle inventory control.

Variability in demand and/or lead time can be compensated for by safety stock.

In the single-period model, if excess cost is double the shortage cost, the approximate stockout risk, assuming an optimum service level, is ___ percent.

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the maximum inventory would be approximately:

Safety stock eliminates all stockouts.

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

The inventory value of the supply chain exceeds the inventory value of the organization's work-in-process inventory.

The calculation of safety stock requires knowledge of demand and lead time variability.

Which of the following is not true for the economic production quantity model?

In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

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

One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

Introduction to Operations Management

Competitiveness

Forecasting

Product and Service Design

RELIABILITY – Static

Strategic Capacity Planning for Products and Services

Decision Theory– Static

Process Selection and Facility Layout

Work Design and Measurement

learning curve– Static

Location Planning and Analysis

The Transportation Model– Static

Management of Quality

Quality Control

Acceptance Sampling– Static

Aggregate Planning and Master Scheduling

MRP and ERP

JIT and Lean Operations

Maintenance– Static

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters