Question 1

Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.

Accepted Answer

A) True 
 B)False

Question 2

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days, and 625 units on hand?

Accepted Answer

A) 550 
B) 500 
C) 715 
D) 450 
E) 475 
A) 550 
B) 500 
C) 715 
D) 450 
E) 475

Question 3

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 4

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to determine the level of quality to specify.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

Accepted Answer

A) About 2.16 
B) About 3.06 
C) About 4.66 
D) About 5.34 
E) About 9.30 
A) About 2.16 
B) About 3.06 
C) About 4.66 
D) About 5.34 
E) About 9.30

Question 7

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 8

If the cost to change from producing one product to producing another were zero, the lot size would be very small.

Accepted Answer

A) True 
 B)False

Question 9

The "sawtooth effect" is named after the jagged shape of the graph of inventory levels over time.

Accepted Answer

A) True 
 B)False

Question 10

A company wants to determine its reorder point (R).Demand is variable and the company wants 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 11

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

Question 12

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an assumption of the basic fixed-order-quantity inventory model?

Accepted Answer

A) Ordering or setup costs are constant. 
B) Inventory holding cost is based on average inventory. 
C) Returns to scale of holding inventory are diminishing. 
D) Lead time is constant. 
E) Demand for the product is uniform throughout the period. 
A) Ordering or setup costs are constant. 
B) Inventory holding cost is based on average inventory. 
C) Returns to scale of holding inventory are diminishing. 
D) Lead time is constant. 
E) Demand for the product is uniform throughout the period.

Question 14

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 15

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

Accepted Answer

A) 1.64 
B) 1.96 
C) 2.05 
D) 2.30 
E) None of these 
A) 1.64 
B) 1.96 
C) 2.05 
D) 2.30 
E) None of these

Question 16

If annual demand is 8,000 units, the ordering cost is $20 per order, and the holding cost is $12.50 per unit per year, what is the optimal order quantity using the fixed-order-quantity inventory model? _____________________________________.

Accepted Answer

The answer of If annual demand is 8,000 units, the...

Question 17

Inventory is defined as the stock of any item or resource used in an organization.

Accepted Answer

A) True 
 B)False

Question 18

Savings from reduced inventory results in increased profit.

Accepted Answer

A) True 
 B)False

Question 19

Shortage costs are precise and easy to measure.

Accepted Answer

A) True 
 B)False

Question 20

Fixed-order-quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.

Accepted Answer

A) True 
 B)False

Exam 20: Inventory Management

Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days, and 625 units on hand?

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?

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to determine the level of quality to specify.

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.

If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?

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

If the cost to change from producing one product to producing another were zero, the lot size would be very small.

The "sawtooth effect" is named after the jagged shape of the graph of inventory levels over time.

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

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

Which of the following is not an assumption of the basic fixed-order-quantity inventory model?

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

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

If annual demand is 8,000 units, the ordering cost is $20 per order, and the holding cost is $12.50 per unit per year, what is the optimal order quantity using the fixed-order-quantity inventory model? _____________________________________.

Inventory is defined as the stock of any item or resource used in an organization.

Savings from reduced inventory results in increased profit.

Shortage costs are precise and easy to measure.

Fixed-order-quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.

Introduction

Strategy

Design of Products and Services

Project Management

Strategic Capacity Management

Learning Curves

Manufacturing Processes

Facility Layout

Service Processes

Waiting Line Analysis and Simulation

Process Design and Analysis

Six Sigma Quality

Statistical Quality Control

Lean Supply Chains

Logistics Distribution, and Transportation

Global Sourcing and Procurement

Enterprise Resource Planning Systems

Forecasting

Sales and Operations Planning

Material Requirements Planning

Workcenter Scheduling

Theory of Constraints

Health Care

Operations Consulting

Filters