Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which is not a true assumption in the basic EOQ model?

Accepted Answer

A)  Each order is received in a single delivery. 
B)  Lead time does not vary. 
C)  No more than three items are involveD. 
D)  Usage rate is constant. 
E)  No quantity discounts. 
A)  Each order is received in a single delivery. 
B)  Lead time does not vary. 
C)  No more than three items are involveD. 
D)  Usage rate is constant. 
E)  No quantity discounts.

Question 3

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 4

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 5

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

Accepted Answer

A)  foreorder costs 
B)  service costs 
C)  shortage costs 
D)  holding costs 
E)  setup costs 
A)  foreorder costs 
B)  service costs 
C)  shortage costs 
D)  holding costs 
E)  setup costs

Question 6

DVD recorders would be an example of independent-demand items.

Accepted Answer

A) True 
 B)False

Question 7

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. At what point should she reorder pepperoni?

Accepted Answer

A)  20 pounds remaining 
B)  40 pounds remaining 
C)  60 pounds remaining 
D)  80 pounds remaining 
E)  100 pounds remaining 
A)  20 pounds remaining 
B)  40 pounds remaining 
C)  60 pounds remaining 
D)  80 pounds remaining 
E)  100 pounds remaining

Question 8

EOQ inventory models are basically concerned with the timing of orders.

Accepted Answer

A) True 
 B)False

Question 9

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

Accepted Answer

A) True 
 B)False

Question 10

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following is not generally a determinant of the reorder point?

Accepted Answer

A)  rate of demand 
B)  length of lead time 
C)  lead time variability 
D)  stockout risk 
E)  purchase cost 
A)  rate of demand 
B)  length of lead time 
C)  lead time variability 
D)  stockout risk 
E)  purchase cost

Question 12

When to order can be calculated by the ROP and expressed as a quantity.

Accepted Answer

A) True 
 B)False

Question 13

The fixed-order-interval model requires a continuous monitoring of inventory levels.

Accepted Answer

A) True 
 B)False

Question 14

The need for safety stocks can be reduced by an operations strategy which:

Accepted Answer

A)  increases lead time. 
B)  increases lead time variability. 
C)  increases lot sizes. 
D)  decreases ordering costs. 
E)  decreases lead time variability. 
A)  increases lead time. 
B)  increases lead time variability. 
C)  increases lot sizes. 
D)  decreases ordering costs. 
E)  decreases lead time variability.

Question 15

Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered.

Accepted Answer

A) True 
 B)False

Question 16

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 the length of an order cycle?

Accepted Answer

A)  0 days 
B)  0.25 days 
C)  3 days 
D)  4 days 
E)  5 days 
A)  0 days 
B)  0.25 days 
C)  3 days 
D)  4 days 
E)  5 days

Question 17

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 18

Reorder point models are primarily used for dependent-demand items.

Accepted Answer

A) True 
 B)False

Question 19

Annual ordering cost is inversely related to order size.

Accepted Answer

A) True 
 B)False

Question 20

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?

Accepted Answer

A)  .5 
B)  .6 
C)  .7 
D)  .8 
E)  .9 
A)  .5 
B)  .6 
C)  .7 
D)  .8 
E)  .9

Exam 18: Inventory Management

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

Which is not a true assumption in the basic EOQ model?

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

Cycle stock inventory is intended to deal with:

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

DVD recorders would be an example of independent-demand items.

EOQ inventory models are basically concerned with the timing of orders.

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Which one of the following is not generally a determinant of the reorder point?

When to order can be calculated by the ROP and expressed as a quantity.

The fixed-order-interval model requires a continuous monitoring of inventory levels.

The need for safety stocks can be reduced by an operations strategy which:

Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered.

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

Reorder point models are primarily used for dependent-demand items.

Annual ordering cost is inversely related to order size.

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?

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