Question 1

In an A-B-C system, the typical percentage of the number of items in inventory for A items is about:

Accepted Answer

A) 10 
B) 30 
C) 50 
D) 70 
E) 90 
A) 10 
B) 30 
C) 50 
D) 70 
E) 90

Question 2

Which is not a true assumption in the EOQ model?

Accepted Answer

A) Production rate is constant 
B) Lead time doesn't vary 
C) No more than 3 items are involved 
D) Usage rate is constant 
E) No quantity discounts 
A) Production rate is constant 
B) Lead time doesn't vary 
C) No more than 3 items are involved 
D) Usage rate is constant 
E) No quantity discounts

Question 3

The basic EOQ model ignores the purchasing cost.

Accepted Answer

A) True 
 B)False

Question 4

Understocking an inventory item is a sure sign of inadequate inventory control.

Accepted Answer

A) True 
 B)False

Question 5

Safety stock eliminates all stock outs.

Accepted Answer

A) True 
 B)False

Question 6

A cycle count program will usually require that 'A' items be counted:

Accepted Answer

A) daily. 
B) once a week. 
C) monthly. 
D) quarterly. 
E) more frequently than annually. 
A) daily. 
B) once a week. 
C) monthly. 
D) quarterly. 
E) more frequently than annually.

Question 7

Estimated demand for gold-filled lockets at Sam's Bargain Jewelry and Housewares is 2,420 lockets a year.Manager Veronica Winters has indicated that ordering cost is $45, and that the following price schedule applies: 1 to 599 lockets, $.90 each; 600 to 1,199 lockets, $.80 each; and 1,200 or more, $.75 each.What order size will minimize total cost if carrying cost is $.18 per locket on an annual basis?

Accepted Answer

D = 2,420 lockets per year
S =

Question 8

For the economic order quantity, what are average weekly total costs, including the cost of the inventory item?

Accepted Answer

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

Question 9

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

Accepted Answer

A) 20 
B) square root of 200 
C) 200 
D) 400 
E) none of these 
A) 20 
B) square root of 200 
C) 200 
D) 400 
E) none of these

Question 10

Which one of the following is not generally a determinant of the reorder point?

Accepted Answer

A) rate of demand 
B) length of lead time 
C) lead time variability 
D) stockout risk 
E) purchase cost 
A) rate of demand 
B) length of lead time 
C) lead time variability 
D) stockout risk 
E) purchase cost

Question 11

Which of the following interactions with vendors would potentially lead to inventory reductions?

Accepted Answer

A) reduce lead times 
B) increase safety stock 
C) less frequent purchases 
D) larger batch quantities 
E) longer order intervals 
A) reduce lead times 
B) increase safety stock 
C) less frequent purchases 
D) larger batch quantities 
E) longer order intervals

Question 12

The management of supply chain inventories focuses on:

Accepted Answer

A) internal inventories 
B) external inventories 
C) both internal and external inventories 
D) safety stock elimination 
E) optimizing reorder points 
A) internal inventories 
B) external inventories 
C) both internal and external inventories 
D) safety stock elimination 
E) optimizing reorder points

Question 13

For the economic order quantity, what is the length of an order cycle?

Accepted Answer

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

Question 14

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

Accepted Answer

A) It doubles. 
B) It is four times its previous amount. 
C) It is half its previous amount. 
D) It is about 70 percent of its previous amount. 
E) It increases by about 40 percent. 
A) It doubles. 
B) It is four times its previous amount. 
C) It is half its previous amount. 
D) It is about 70 percent of its previous amount. 
E) It increases by about 40 percent.

Question 15

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately:

Accepted Answer

A) 11 
B) 20 
C) 24 
D) 28 
E) 375 
A) 11 
B) 20 
C) 24 
D) 28 
E) 375

Question 16

At what point should she reorder pepperoni?

Accepted Answer

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

Question 17

Which of the following is not one of the assumptions of the basic EOQ model?

Accepted Answer

A) Annual demand requirements are known and constant. 
B) Lead time does not vary. 
C) Each order is received in a single delivery. 
D) Quantity discounts are available. 
E) All of the above are necessary assumptions. 
A) Annual demand requirements are known and constant. 
B) Lead time does not vary. 
C) Each order is received in a single delivery. 
D) Quantity discounts are available. 
E) All of the above are necessary assumptions.

Question 18

The manager of a bakery orders three 'cake-to-go' wedding cakes every Saturday to accommodate last minute purchases.Demand for the cakes can be described by a Poisson distribution that has a mean of 2.The cakes cost $10 each to prepare, and they sell for $26 each.Any cakes that haven't been sold by the end of the day are sold for half price the next day.Usually, half of those are sold and the rest are tossed.What stocking level would be appropriate?

Accepted Answer

Cs = $26 - $10 = $16
Ce = $10

Question 19

The two main concerns of inventory control relate to the costs and the level of customer service.

Accepted Answer

A) True 
 B)False

Question 20

All of the following are possible reasons for using the fixed order interval model except:

Accepted Answer

A) Supplier policy encourages use. 
B) Grouping orders can save in shipping costs. 
C) The required safety stock is lower than with an EOQ/ROP model. 
D) It is suited to periodic checks of inventory levels rather than continuous monitoring. 
E) Continuous monitoring is not practical. 
A) Supplier policy encourages use. 
B) Grouping orders can save in shipping costs. 
C) The required safety stock is lower than with an EOQ/ROP model. 
D) It is suited to periodic checks of inventory levels rather than continuous monitoring. 
E) Continuous monitoring is not practical.

Exam 13: Inventory Management

In an A-B-C system, the typical percentage of the number of items in inventory for A items is about:

Which is not a true assumption in the EOQ model?

The basic EOQ model ignores the purchasing cost.

Understocking an inventory item is a sure sign of inadequate inventory control.

Safety stock eliminates all stock outs.

A cycle count program will usually require that 'A' items be counted:

For the economic order quantity, what are average weekly total costs, including the cost of the inventory item?

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

Which one of the following is not generally a determinant of the reorder point?

Which of the following interactions with vendors would potentially lead to inventory reductions?

The management of supply chain inventories focuses on:

For the economic order quantity, what is the length of an order cycle?

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately:

At what point should she reorder pepperoni?

Which of the following is not one of the assumptions of the basic EOQ model?

The two main concerns of inventory control relate to the costs and the level of customer service.

All of the following are possible reasons for using the fixed order interval model except:

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

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