Question 1

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 C

Question 2

Using the fixed-time-period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity?

Accepted Answer

A) 863 
B) 948 
C) 1,044 
D) 1,178 
E) 4,510 
A) 863 
B) 948 
C) 1,044 
D) 1,178 
E) 4,510 A

Question 3

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  False

Question 4

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

Accepted Answer

A) True 
 B)False

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

The average cost of inventory in the United States is 20 to 25 percent of its value.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Accepted Answer

A) Forecast average daily demand 
B) Safety stock 
C) Inventory currently on hand 
D) Ordering cost 
E) Lead time in days 
A) Forecast average daily demand 
B) Safety stock 
C) Inventory currently on hand 
D) Ordering cost 
E) Lead time in days

Question 8

Fixed-time-period inventory models are "event triggered."

Accepted Answer

A) True 
 B)False

Question 9

In ABC Printing, Queen's black is a popular input with an annual demand of 50,000 gallons.ordering cost of $50 per order, and the holding cost is $5 per unit per year; the economic order quantity is 1000.Hence during the year, they used 1000 as the order quantity.An audit of the costs revealed that the true ordering cost was only $25 and the true holding cost was $10 per gallon per year.The correct order quantity would have been 500.How much did ABC lose due to incorrect cost information during the year?

Accepted Answer

A) 0 
B) 1250 
C) -1250 
D) 500 
E) Cannot be found without additional information. 
A) 0 
B) 1250 
C) -1250 
D) 500 
E) Cannot be found without additional information.

Question 10

Demand for organic super fresh lettuce in a local super market is 5 with probability 0.2; 6 with probability 0.3; 7 with probability 0.4 or 8 with probability 0.1.Unsold lettuce are given to a food bank with a salvage value of $1.00 per lettuce.Cost of the lettuce eis $3:00 per unit.Selling price is $6:00 per unit.Using single period model, what is the optimal order quantity in number of units of lettuce the super market should use?

Accepted Answer

A)  7 
B)  6 
C)  5 
D)  8 
E)  None of these 
A)  7 
B)  6 
C)  5 
D)  8 
E)  None of these

Question 11

Using the simple order quantity model in an inventory control problem, Kathy calculated the order quantity to be 1000 units.In a review, she found out that the demand is actually double that of the quantity she had used and the holding cost is only half that of the value she used, The new economic order quantity using the correct data will be:

Accepted Answer

A) 1000 
B) 2000 
C) 1414 
D) 707.1 
E) cannot be found without other cost information. 
A) 1000 
B) 2000 
C) 1414 
D) 707.1 
E) cannot be found without other cost information.

Question 12

The fixed-time-period inventory system has a smaller average inventory than the fixed-order-quantity system because it must also protect against stock outs during the review period when inventory is checked.

Accepted Answer

A) True 
 B)False

Question 13

In the fixed-time-period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

Accepted Answer

A) True 
 B)False

Question 14

If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text), and if the profit resulting from the last unit being sold (Cu) is $120 and the loss resulting from that unit if it is not sold (Co) is $360, which of the following is the probability of the last unit being sold?

Accepted Answer

A) Greater than 0.90 
B) Greater than 0.85 
C) Greater than 0.75 
D) Greater than 0.25 
E) None of these 
A) Greater than 0.90 
B) Greater than 0.85 
C) Greater than 0.75 
D) Greater than 0.25 
E) None of these

Question 15

Using the fixed-time-period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a z of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity?

Accepted Answer

A) About 1,086 
B) About 1,686 
C) About 1,806 
D) About 2,206 
E) About 2,686 
A) About 1,086 
B) About 1,686 
C) About 1,806 
D) About 2,206 
E) About 2,686

Question 16

Shortage costs are precise and easy to measure.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Accepted Answer

A) True 
 B)False

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?

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

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

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.

The average cost of inventory in the United States is 20 to 25 percent of its value.

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Fixed-time-period inventory models are "event triggered."

The fixed-time-period inventory system has a smaller average inventory than the fixed-order-quantity system because it must also protect against stock outs during the review period when inventory is checked.

In the fixed-time-period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

Shortage costs are precise and easy to measure.

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.

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

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

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Introduction

Strategy

Project Management

Design of Products and Services

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

Exam 20: Inventory Management

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?

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

One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

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.

The average cost of inventory in the United States is 20 to 25 percent of its value.

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Fixed-time-period inventory models are "event triggered."

The fixed-time-period inventory system has a smaller average inventory than the fixed-order-quantity system because it must also protect against stock outs during the review period when inventory is checked.

In the fixed-time-period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

Shortage costs are precise and easy to measure.

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.

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

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

One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.

Introduction

Strategy

Project Management

Design of Products and Services

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