Question 1

Figure 7-1
Use the graph below to answer the question(s).  
-Which of the following is true under the Periodic Review System:

Accepted Answer

A) a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon 
B) a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon 
C) it is more expensive to administer 
D) The only uncertainty is the magnitude of demand during the delivery lead time 
E) there are no discrepancies between physical inventory and the stock record 
A) a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon 
B) a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon 
C) it is more expensive to administer 
D) The only uncertainty is the magnitude of demand during the delivery lead time 
E) there are no discrepancies between physical inventory and the stock record

Question 2

Radio Frequency Identification (RFID)is considered an eventual replacement of bar code because of its ability to store huge amounts of information to differentiate goods at the item level.

Accepted Answer

A) True 
 B)False

Question 3

Companies hold a supply of inventory for all of the following reasons EXCEPT:

Accepted Answer

A) meet variation in product demand 
B) increase production change/setup costs 
C) allow production scheduling flexibility 
D) purchase in bulk to take advantage of quantity discounts 
E) maintain independence of operations (Decoupling) 
A) meet variation in product demand 
B) increase production change/setup costs 
C) allow production scheduling flexibility 
D) purchase in bulk to take advantage of quantity discounts 
E) maintain independence of operations (Decoupling)

Question 4

The continuous review inventory system requires less safety stock compared to the periodic review inventory system.

Accepted Answer

A) True 
 B)False

Question 5

The manager at Robert's Cigars wants to determine the lowest cost order policy given the following purchase discounts offered: cigar costs are $4 each for orders less than 500; $3.50 each for orders of 500 - 1000; and $3.25 each for orders greater than 1000.The order cost = $75,annual demand forecast = 5500 cigars,inventory carrying cost = 30% per year.

Accepted Answer

Step 1
Determine the 3 EOQ's−
For $4 cig

Question 6

Figure 7-1
Use the graph below to answer the question(s).  
-Which of the following is TRUE in relation to Figure 7-1?

Accepted Answer

A) Curve J represents the annual ordering cost, and curve K represents the annual holding cost. 
B) A lot size of G has an annual total cost of about C. 
C) At lot size H both holding costs and ordering costs exceed the annual total cost. 
D) The EOQ is most likely lot size G, and curve L is the annual ordering cost curve. 
A) Curve J represents the annual ordering cost, and curve K represents the annual holding cost. 
B) A lot size of G has an annual total cost of about C. 
C) At lot size H both holding costs and ordering costs exceed the annual total cost. 
D) The EOQ is most likely lot size G, and curve L is the annual ordering cost curve.

Question 7

The four broad categories of inventory are raw materials,work-in-process,subassemblies,and finished goods.

Accepted Answer

A) True 
 B)False

Question 8

ABC Inventory Matrix
Use the graph below to answer the question(s).  
-In the ABC Inventory Matrix,inventory in area Y suggests

Accepted Answer

A) under-stocked A and B items. 
B) under-stocked B and C items. 
C) overstocked A and B items. 
D) over-stocked B and C items. 
E) inventory matches sales. 
A) under-stocked A and B items. 
B) under-stocked B and C items. 
C) overstocked A and B items. 
D) over-stocked B and C items. 
E) inventory matches sales.

Question 9

The cost of a widget is $5,and the carrying rate is 40%; cost of processing an order is $25,annual demand is for 400 widgets,and supply and usage patterns are stable.What is the economic order quantity (EOQ)?

Accepted Answer

A) 5 
B) 20 
C) 25 
D) 100 
E) 200 
A) 5 
B) 20 
C) 25 
D) 100 
E) 200

Question 10

Relaxing the instantaneous replenishment assumption of the EOQ model results in the Economic Manufacturing Quantity model.

Accepted Answer

A) True 
 B)False

Question 11

____,such as lubricants for machines,are used in the production process,but do not become parts of the final products.

Accepted Answer

A) Raw materials 
B) Work-in-process 
C) Maintenance, repair and operating supplies 
D) Finished goods 
E) Cycle stock 
A) Raw materials 
B) Work-in-process 
C) Maintenance, repair and operating supplies 
D) Finished goods 
E) Cycle stock

Question 12

Use this information below to calculate the optimal order quantity:Annual demand for backpacks is 43,000 unitsThe cost to place an order is $220The per unit cost of the item is $60.00The annual holding rate is 37.5%Choose the closest answer.

Accepted Answer

A) 920 units 
B) 250 units 
C) 710 units 
D) 830 units 
A) 920 units 
B) 250 units 
C) 710 units 
D) 830 units

Figure 7-1 Use the graph below to answer the question(s). -Which of the following is true under the Periodic Review System:

Radio Frequency Identification (RFID)is considered an eventual replacement of bar code because of its ability to store huge amounts of information to differentiate goods at the item level.

Companies hold a supply of inventory for all of the following reasons EXCEPT:

The continuous review inventory system requires less safety stock compared to the periodic review inventory system.

Figure 7-1 Use the graph below to answer the question(s). -Which of the following is TRUE in relation to Figure 7-1?

The four broad categories of inventory are raw materials,work-in-process,subassemblies,and finished goods.

ABC Inventory Matrix Use the graph below to answer the question(s). -In the ABC Inventory Matrix,inventory in area Y suggests

The cost of a widget is $5,and the carrying rate is 40%; cost of processing an order is $25,annual demand is for 400 widgets,and supply and usage patterns are stable.What is the economic order quantity (EOQ)?

Relaxing the instantaneous replenishment assumption of the EOQ model results in the Economic Manufacturing Quantity model.

____,such as lubricants for machines,are used in the production process,but do not become parts of the final products.

Use this information below to calculate the optimal order quantity:Annual demand for backpacks is 43,000 unitsThe cost to place an order is $220The per unit cost of the item is $60.00The annual holding rate is 37.5%Choose the closest answer.

Introduction to Supply Chain Management

Purchasing Management

Creating and Managing Supplier Relationship

Ethical and Sustainable Sourcing

Demand Forecasting

Resource Planning Systems

Process Management - Lean and Six Sigma in the Supply Chain

Domestic Usand Global Logistics

Customer Relationship Management

Global Location Decisions

Service Response Logistics

Supply Chain Process Integration

Performance Measurement Along the Supply Chain

Filters

Exam 7: Inventory Management

Figure 7-1 Use the graph below to answer the question(s). -Which of the following is true under the Periodic Review System:

Radio Frequency Identification (RFID)is considered an eventual replacement of bar code because of its ability to store huge amounts of information to differentiate goods at the item level.

Companies hold a supply of inventory for all of the following reasons EXCEPT:

The continuous review inventory system requires less safety stock compared to the periodic review inventory system.

Figure 7-1 Use the graph below to answer the question(s). -Which of the following is TRUE in relation to Figure 7-1?

The four broad categories of inventory are raw materials,work-in-process,subassemblies,and finished goods.

ABC Inventory Matrix Use the graph below to answer the question(s). -In the ABC Inventory Matrix,inventory in area Y suggests

The cost of a widget is $5,and the carrying rate is 40%; cost of processing an order is $25,annual demand is for 400 widgets,and supply and usage patterns are stable.What is the economic order quantity (EOQ)?

Relaxing the instantaneous replenishment assumption of the EOQ model results in the Economic Manufacturing Quantity model.

____,such as lubricants for machines,are used in the production process,but do not become parts of the final products.

Use this information below to calculate the optimal order quantity:Annual demand for backpacks is 43,000 unitsThe cost to place an order is $220The per unit cost of the item is $60.00The annual holding rate is 37.5%Choose the closest answer.

Introduction to Supply Chain Management

Purchasing Management

Creating and Managing Supplier Relationship

Ethical and Sustainable Sourcing

Demand Forecasting

Resource Planning Systems

Process Management - Lean and Six Sigma in the Supply Chain

Domestic Usand Global Logistics

Customer Relationship Management

Global Location Decisions

Service Response Logistics

Supply Chain Process Integration

Performance Measurement Along the Supply Chain

Filters