Exam 11: Inventory Management

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.

Safety stock is not necessary in any fixed-time period system.

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory,and then subtracting back-ordered inventory.

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 and to check to see whether the lowest cost quantity is feasible.

Which of the following is usually included as an inventory holding cost?

If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.

Using the fixed-time period inventory model,and given an average daily demand of 15 units,3 days between inventory reviews,1 day for lead time,30 units of inventory on hand,a service probability of 98 percent,and a standard deviation of daily demand is 3 units,which of the following is the order quantity?

In inventory models,high holding costs tend to favor high inventory levels.

Shortage costs are precise and easy to measure.

In making any decision that affects inventory size,which of the following costs do not need to be considered?

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

The 80-20 rule,that is the logic of the few having the greatest importance and the many having little importance has been broadened to include inventory situations.The term often used to refer to this logic is called what?

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company.You know that vendor lead time is 5 days and the number of days between reviews is 7.Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?

Which of the following is not a reason to carry inventory?

When developing inventory cost models,which of the following are not included as costs to place an order?

The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained,when stock should be replenished,and how large orders should be.

Dependent demand inventory levels are usually managed by calculations using calculus-driven,cost-minimizing models.

The costs associated with reduced inventory results in lower profits.