Question 1

In a price break model of lot sizing,to find the lowest-cost order quantity,it is sometimes necessary to calculate the economic order quantity for each possible price.

Accepted Answer

A) True 
 B)False  True

Question 2

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

Accepted Answer

A) True 
 B)False  True

Question 3

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Accepted Answer

A) True 
 B)False  False

Question 4

company is planning for its financing needs and uses the basic fixed-order quantity inventory model.Which of the following is the total cost (TC)of the inventory given an annual demand of 10,000,setup cost of $32,a holding cost per unit per year of $4,an EOQ of 400 units,and a cost per unit of inventory of $150?

Accepted Answer

A) $1,501,600 
B) $1,498,200 
C) $500,687 
D) $499,313 
E) None of these 
A) $1,501,600 
B) $1,498,200 
C) $500,687 
D) $499,313 
E) None of these

Question 5

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

Accepted Answer

A) C 
B) TC 
C) H 
D) Q 
E) S 
A) C 
B) TC 
C) H 
D) Q 
E) S

Question 6

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Accepted Answer

A) A items get 15%,B items get 35%,and C items get 50% 
B) A items get 15%,B items get 45%,and C items get 40% 
C) A items get 25%,B items get 35%,and C items get 40% 
D) A items get 25%,B items get 15%,and C items get 60% 
E) A items get 20%,B items get 30%,and C items get 50% 
A) A items get 15%,B items get 35%,and C items get 50% 
B) A items get 15%,B items get 45%,and C items get 40% 
C) A items get 25%,B items get 35%,and C items get 40% 
D) A items get 25%,B items get 15%,and C items get 60% 
E) A items get 20%,B items get 30%,and C items get 50%

Question 7

company wants to determine its reorder point (R).Demand is variable and they want to build a safety stock into R.If the average daily demand is 12,the lead time is 5 days,the desired "z" value is 1.96,and the standard deviation of usage during lead time is 3,which of the following is the desired value of R?

Accepted Answer

A) About 6 
B) About 16 
C) About 61 
D) About 66 
E) About 79 
A) About 6 
B) About 16 
C) About 61 
D) About 66 
E) About 79

Question 8

Fixed-order quantity inventory models are "time triggered."

Accepted Answer

A) True 
 B)False

Question 9

One of the drivers of the direct-to-store (direct distribution)approach is the increase in global sourcing.

Accepted Answer

A) True 
 B)False

Question 10

The optimal stocking decision in inventory management,when using marginal analysis,occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

Accepted Answer

A) True 
 B)False

Question 11

company has recorded the last six days of daily demand on a single product they sell.Those values are 37,115,93,112,73,and 110.The time from when an order is placed to when it arrives at the company from its vendor is 3 days.Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed,which of the following is the reorder point (R)?

Accepted Answer

A) 540 
B) 270 
C) 115 
D) 90 
E) 60 
A) 540 
B) 270 
C) 115 
D) 90 
E) 60

Question 12

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Accepted Answer

A) Normal variation in shipping time 
B) A shortage of material at the vendor's plant causing backlogs 
C) An unexpected strike at the vendor's plant 
D) A lost order 
E) Redundant ordering systems 
A) Normal variation in shipping time 
B) A shortage of material at the vendor's plant causing backlogs 
C) An unexpected strike at the vendor's plant 
D) A lost order 
E) Redundant ordering systems

Question 13

Firms keep supplies of inventory for which of the following reasons?

Accepted Answer

A) To maintain dependence of operations 
B) To provide a feeling of security for the workforce 
C) To meet variation in product demand 
D) To hedge against wage increases 
E) In case the supplier changes the design 
A) To maintain dependence of operations 
B) To provide a feeling of security for the workforce 
C) To meet variation in product demand 
D) To hedge against wage increases 
E) In case the supplier changes the design

Question 14

Using the fixed-time period inventory model,and given an average daily demand of 200 units,4 days between inventory reviews,5 days for lead time,120 units of inventory on hand,a "z" of 1.96,and a standard deviation of demand over the review and lead time of 3 units,which of the following is the order quantity?

Accepted Answer

A) About 1,086 
B) About 1,686 
C) About 1,806 
D) About 2,206 
E) About 2,686 
A) About 1,086 
B) About 1,686 
C) About 1,806 
D) About 2,206 
E) About 2,686

Question 15

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

Accepted Answer

A) 50 
B) 100 
C) 400 
D) 1,000 
E) 1,600 
A) 50 
B) 100 
C) 400 
D) 1,000 
E) 1,600

Question 16

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model,which of the following must be computed first?

Accepted Answer

A) Standard deviation of daily demand 
B) Number of standard deviations for a specific service probability 
C) Stockout cost 
D) Economic order quantity 
E) Safety stock level 
A) Standard deviation of daily demand 
B) Number of standard deviations for a specific service probability 
C) Stockout cost 
D) Economic order quantity 
E) Safety stock level

Question 17

To take into consideration demand uncertainty in reorder point (R)calculations,what do we add to the product of the average daily demand and lead time in days when calculating the value of R?

Accepted Answer

A) The product of average daily demand times a standard deviation of lead time 
B) A "z" value times the lead time in days 
C) The standard deviation of vendor lead time times the standard deviation of demand 
D) The product of lead time in days times the standard deviation of lead time 
E) The product of the standard deviation of demand variability and a "z" score relating to a specific service probability. 
A) The product of average daily demand times a standard deviation of lead time 
B) A "z" value times the lead time in days 
C) The standard deviation of vendor lead time times the standard deviation of demand 
D) The product of lead time in days times the standard deviation of lead time 
E) The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.

Question 18

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand,which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?
79)

Accepted Answer

A) 1.28 
B) 1.64 
C) 1.96 
D) 2.00 
E) 2.18 
A) 1.28 
B) 1.64 
C) 1.96 
D) 2.00 
E) 2.18

Question 19

If annual demand is 12,000 units,the ordering cost is $6 per order,and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

Accepted Answer

A) 576 
B) 240 
C) 120.4 
D) 60.56 
E) 56.03 
A) 576 
B) 240 
C) 120.4 
D) 60.56 
E) 56.03

Question 20

Which of the following is not one of the categories of manufacturing inventory?

Accepted Answer

A) Raw materials 
B) Finished products 
C) Component parts 
D) Just-in-time 
E) Supplies 
A) Raw materials 
B) Finished products 
C) Component parts 
D) Just-in-time 
E) Supplies

In a price break model of lot sizing,to find the lowest-cost order quantity,it is sometimes necessary to calculate the economic order quantity for each possible price.

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Fixed-order quantity inventory models are "time triggered."

One of the drivers of the direct-to-store (direct distribution)approach is the increase in global sourcing.

The optimal stocking decision in inventory management,when using marginal analysis,occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Firms keep supplies of inventory for which of the following reasons?

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model,which of the following must be computed first?

To take into consideration demand uncertainty in reorder point (R)calculations,what do we add to the product of the average daily demand and lead time in days when calculating the value of R?

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand,which of the following is the number of standard deviations necessary to have the 95 percent service probability assured? 79)

If annual demand is 12,000 units,the ordering cost is $6 per order,and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

Which of the following is not one of the categories of manufacturing inventory?

Operations and Supply Chain Management

Strategy and Sustainability

Forecasting

Strategic Capacity Management

PART-A: Learning Curves

Projects Manufacturing and Service Processes

Manufacturing Processes

PART-A: Break-Even Analysis

Service Processes

Sales and Operations Planning

Material Requirements Planning

Quality Management and Six-Sigma Supply Chain Processes and Analytics

Lean Supply Chains

Global Sourcing and Procurement

Location, Logistics and Distribution

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Exam 11: Inventory Management

In a price break model of lot sizing,to find the lowest-cost order quantity,it is sometimes necessary to calculate the economic order quantity for each possible price.

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Fixed-order quantity inventory models are "time triggered."

One of the drivers of the direct-to-store (direct distribution)approach is the increase in global sourcing.

The optimal stocking decision in inventory management,when using marginal analysis,occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Firms keep supplies of inventory for which of the following reasons?

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model,which of the following must be computed first?

To take into consideration demand uncertainty in reorder point (R)calculations,what do we add to the product of the average daily demand and lead time in days when calculating the value of R?

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand,which of the following is the number of standard deviations necessary to have the 95 percent service probability assured? 79)

If annual demand is 12,000 units,the ordering cost is $6 per order,and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

Which of the following is not one of the categories of manufacturing inventory?

Operations and Supply Chain Management

Strategy and Sustainability

Forecasting

Strategic Capacity Management

PART-A: Learning Curves

Projects Manufacturing and Service Processes

Manufacturing Processes

PART-A: Break-Even Analysis

Service Processes

Sales and Operations Planning

Material Requirements Planning

Quality Management and Six-Sigma Supply Chain Processes and Analytics

Lean Supply Chains

Global Sourcing and Procurement

Location, Logistics and Distribution

Filters