Question 1

The EOQ should be regarded as an approximate quantity rather than an exact quantity.Thus, rounding the calculated value is acceptable.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A risk avoider would want ______ safety stock.

Accepted Answer

A) Less 
B) More 
C) The same 
D) Zero 
E) 50% 
A) Less 
B) More 
C) The same 
D) Zero 
E) 50%

Question 4

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 5

The cost of placing an order is a function of order size.

Accepted Answer

A) True 
 B)False

Question 6

If she were to order 6,000 bills at a time, what would be the average monthly total costs, EXCLUDING the value of the bills?

Accepted Answer

A) $625 
B) $1,250 
C) $2,500 
D) $3,125 
E) $37,500 
A) $625 
B) $1,250 
C) $2,500 
D) $3,125 
E) $37,500

Question 7

At what point should he reorder Stein beer?

Accepted Answer

A) 0 cases remaining 
B) 4 cases remaining 
C) 12 cases remaining 
D) 16 cases remaining 
E) 20 cases remaining 
A) 0 cases remaining 
B) 4 cases remaining 
C) 12 cases remaining 
D) 16 cases remaining 
E) 20 cases remaining

Question 8

A fill rate is the percentage of _____ filled by stock on hand.

Accepted Answer

A) Shipments 
B) Demand 
C) Inventory 
D) Safety stock 
E) Lead time 
A) Shipments 
B) Demand 
C) Inventory 
D) Safety stock 
E) Lead time

Question 9

A service garage uses 120 boxes of cleaning cloths a year.The boxes cost $6 each.Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on an annual basis.
Determine:
(A) The economic order quantity
(B) The total cost of carrying the cloths (excluding purchase price)
(C) The average inventory

Accepted Answer

D = 120 boxes per ye

Question 10

A car rental agency uses 96 boxes of staples a year.The boxes cost $4 each.It costs $10 to order staples, and carrying costs are $0.80 per box on an annual basis.
Determine:
(A) the order quantity that will minimize the sum of ordering and holding boxes of staples
(B) the annual cost of ordering and carrying the boxes of staples

Accepted Answer

D = 96 box

Question 11

The introduction of quantity discounts will cause the optimum order quantity to be:

Accepted Answer

A) smaller 
B) unchanged 
C) greater 
D) smaller or unchanged 
E) unchanged or greater 
A) smaller 
B) unchanged 
C) greater 
D) smaller or unchanged 
E) unchanged or greater

Question 12

It is critical that the exact quantity calculated in the EOQ model be ordered.

Accepted Answer

A) True 
 B)False

Question 13

Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations.

Accepted Answer

A) True 
 B)False

Question 14

In a single-period model, if shortage cost is four times excess cost, then the optimum service level is ___ percent.

Accepted Answer

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

Question 15

If order size was 1,000 kilograms of resin, what would be the length of an order cycle?

Accepted Answer

A) 0.05 days 
B) 4 days 
C) 16 days 
D) 20 days 
E) 50 days 
A) 0.05 days 
B) 4 days 
C) 16 days 
D) 20 days 
E) 50 days

Question 16

The larger the number of orders placed, the larger the average level of inventory.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

Accepted Answer

A) True 
 B)False

Exam 13: Inventory Management

The EOQ should be regarded as an approximate quantity rather than an exact quantity.Thus, rounding the calculated value is acceptable.

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

A risk avoider would want ______ safety stock.

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

The cost of placing an order is a function of order size.

If she were to order 6,000 bills at a time, what would be the average monthly total costs, EXCLUDING the value of the bills?

At what point should he reorder Stein beer?

A fill rate is the percentage of _____ filled by stock on hand.

The introduction of quantity discounts will cause the optimum order quantity to be:

It is critical that the exact quantity calculated in the EOQ model be ordered.

Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations.

In a single-period model, if shortage cost is four times excess cost, then the optimum service level is ___ percent.

If order size was 1,000 kilograms of resin, what would be the length of an order cycle?

The larger the number of orders placed, the larger the average level of inventory.

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

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

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

Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Extension 4: Reliability

Extension 5: Decision Theory

Extension 7: Learning Curves

Extension 8: The Transportation Model

Extension 10: Acceptance Sampling

Extension 14: Maintenance

Filters