Question 1

In a single-period model, if shortage and excess costs are equal, then the optimum service level is:

Accepted Answer

A) 0 
B) .33 
C) .50 
D) .67 
E) none of these 
A) 0 
B) .33 
C) .50 
D) .67 
E) none of these

Question 2

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 two 
D) remain the same 
E) none of the above 
A) double 
B) increase, but not double 
C) decrease by a factor of two 
D) remain the same 
E) none of the above

Question 3

A bakery's use of corn sweetener is normally distributed with a mean of 80 gallons per day and a standard deviation of four gallons per day.Lead time for delivery of the corn sweetener is normal with a mean of six days and a standard deviation of two days.If the manager wants a service level of 99 percent, what reorder point should be used?

Accepted Answer

For a 99 percent service level

Question 4

Compared to the EOQ, the maximum inventory would be approximately:

Accepted Answer

A) 70 percent higher 
B) 30 percent higher 
C) the same 
D) 30 percent lower 
E) 70 percent lower 
A) 70 percent higher 
B) 30 percent higher 
C) the same 
D) 30 percent lower 
E) 70 percent lower

Question 5

A single-period model would be used mainly by organizations going out of business.

Accepted Answer

A) True 
 B)False

Question 6

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

Accepted Answer

A) True 
 B)False

Question 7

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Accepted Answer

A) True 
 B)False

Question 8

An operations strategy for inventory management should work towards:

Accepted Answer

A) increasing lot sizes 
B) decreasing lot sizes 
C) increasing safety stocks 
D) decreasing service levels 
E) increasing order quantities 
A) increasing lot sizes 
B) decreasing lot sizes 
C) increasing safety stocks 
D) decreasing service levels 
E) increasing order quantities

Question 9

Decoupling operations applies to the railroad industry.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is least likely to be included in order costs?

Accepted Answer

A) processing vendor invoices for payment 
B) moving delivered goods to temporary storage 
C) inspecting incoming goods for quantity 
D) taking an inventory to determine how much is needed 
E) temporary storage of delivered goods 
A) processing vendor invoices for payment 
B) moving delivered goods to temporary storage 
C) inspecting incoming goods for quantity 
D) taking an inventory to determine how much is needed 
E) temporary storage of delivered goods

Question 11

The inventory value of the supply chain exceeds the inventory value of the organization's work in process inventory.

Accepted Answer

A) True 
 B)False

Question 12

For the economic order quantity, what are average weekly ordering costs?

Accepted Answer

The answer of For the economic order quantity, what are...

Question 13

At what point should resin be reordered?

Accepted Answer

A) 0 kilograms remaining 
B) 50 kilograms remaining 
C) 200 kilograms remaining 
D) 400 kilograms remaining 
E) 500 kilograms remaining 
A) 0 kilograms remaining 
B) 50 kilograms remaining 
C) 200 kilograms remaining 
D) 400 kilograms remaining 
E) 500 kilograms remaining

Question 14

Lead time is exactly 20 days long.Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons.What is the standard deviation of demand during lead time?

Accepted Answer

A) 20 x 2 
B) 20 x 10 
C) 2 times the square root of 20 
D) 2 times the square root of 10 
E) none of the above 
A) 20 x 2 
B) 20 x 10 
C) 2 times the square root of 20 
D) 2 times the square root of 10 
E) none of the above

Question 15

All stock outs must be avoided.

Accepted Answer

A) True 
 B)False

Question 16

If she were to order 80 pounds of pepperoni at a time, what would be the total daily costs, including the cost of the pepperoni?

Accepted Answer

A) $60.00 
B) $63.20 
C) $64.00 
D) $64.10 
E) $65.00 
A) $60.00 
B) $63.20 
C) $64.00 
D) $64.10 
E) $65.00

Question 17

A firm stocks a seasonal item that it buys for $22/unit and sells for $29 unit.During the season, daily demand can be described using a Poisson distribution with a mean of 2.4.Because of the nature of the item, units remaining at the close of business each day must be removed at a cost of $2 each.What is the optimum stocking level, and what is the effective service level?

Accepted Answer

Cs = $29 - $22 = $7
Ce = $22 + $2 = $24

Question 18

If unsold copies can be returned for half credit and copies sell for $4.25 each, find the optimal stocking level.

Accepted Answer

Ce = $1.50/2 = $.75 Cs = $4.25

Question 19

DVD recorders would be an example of independent demand items.

Accepted Answer

A) True 
 B)False

Question 20

If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be:

Accepted Answer

A) 20 
B) 50 
C) 70 
D) 80 
E) 130 
A) 20 
B) 50 
C) 70 
D) 80 
E) 130

Exam 13: Inventory Management

In a single-period model, if shortage and excess costs are equal, then the optimum service level is:

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

Compared to the EOQ, the maximum inventory would be approximately:

A single-period model would be used mainly by organizations going out of business.

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

An operations strategy for inventory management should work towards:

Decoupling operations applies to the railroad industry.

Which of the following is least likely to be included in order costs?

The inventory value of the supply chain exceeds the inventory value of the organization's work in process inventory.

For the economic order quantity, what are average weekly ordering costs?

At what point should resin be reordered?

Lead time is exactly 20 days long.Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons.What is the standard deviation of demand during lead time?

All stock outs must be avoided.

If she were to order 80 pounds of pepperoni at a time, what would be the total daily costs, including the cost of the pepperoni?

If unsold copies can be returned for half credit and copies sell for $4.25 each, find the optimal stocking level.

DVD recorders would be an example of independent demand items.

If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be:

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