Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Using the fixed-order quantity model,what is the total ordering cost of inventory given an annual demand of 36,000 units,a cost per order of $40 and a holding cost per unit per year of $45? ______________________________________________

Accepted Answer

$5,692
Explanation: Using equation 11.3,

Question 3

You should visualize inventory as stacks of money sitting on forklifts,on shelves,and in trucks and planes while in transit.

Accepted Answer

A) True 
 B)False

Question 4

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company.You know that vendor lead time is 10 days and the number of days between reviews is 15.Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10?

Accepted Answer

A)  25 
B)  40 
C)  50 
D)  73 
E)  100 
A)  25 
B)  40 
C)  50 
D)  73 
E)  100

Question 5

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first?

Accepted Answer

A)  Standard deviation of daily demand 
B)  Number of standard deviations for a specific service probability 
C)  Stockout cost 
D)  Economic order quantity 
E)  Safety stock level 
A)  Standard deviation of daily demand 
B)  Number of standard deviations for a specific service probability 
C)  Stockout cost 
D)  Economic order quantity 
E)  Safety stock level

Question 6

Which of the following is one of the categories of manufacturing inventory?

Accepted Answer

A)  Economic Order Inventory 
B)  Work-in-process 
C)  Quality units 
D)  JIT Inventory 
E)  Re-order point 
A)  Economic Order Inventory 
B)  Work-in-process 
C)  Quality units 
D)  JIT Inventory 
E)  Re-order point

Question 7

If the cost to change from producing one product to producing another were zero the lot size would be very small.

Accepted Answer

A) True 
 B)False

Question 8

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

Accepted Answer

A) True 
 B)False

Question 9

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 10

In making any decision that affects the size of inventory,what are the four categories of cost that must be considered?
1.__________________________________________
2.__________________________________________
3.__________________________________________
4.__________________________________________

Accepted Answer

(1 Holding (or carrying cost; (2 Setup (

Question 11

If annual demand is 12,000 units,the ordering cost is $6 per order and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

Accepted Answer

A)  576 
B)  240 
C)  120.4 
D)  60.56 
E)  56.03 
A)  576 
B)  240 
C)  120.4 
D)  60.56 
E)  56.03

Question 12

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Accepted Answer

A)  Normal variation in shipping time 
B)  A shortage of material at the vendor's plant causing backlogs 
C)  An unexpected strike at the vendor's plant 
D)  A lost order 
E)  Redundant ordering systems 
A)  Normal variation in shipping time 
B)  A shortage of material at the vendor's plant causing backlogs 
C)  An unexpected strike at the vendor's plant 
D)  A lost order 
E)  Redundant ordering systems

Question 13

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following are fixed-order quantity inventory models?

Accepted Answer

A)  Economic order quantity model 
B)  The ABC model 
C)  Periodic replenishment model 
D)  Cycle counting model 
E)  P model 
A)  Economic order quantity model 
B)  The ABC model 
C)  Periodic replenishment model 
D)  Cycle counting model 
E)  P model

Question 15

A company is planning for its financing needs and uses the basic fixed-order quantity inventory model.Which of the following is the total cost (TC)of the inventory given an annual demand of 10,000,setup cost of $32,a holding cost per unit per year of $4,an EOQ of 400 units,and a cost per unit of inventory of $150?

Accepted Answer

A)  $1,501,600 
B)  $1,498,200 
C)  $500,687 
D)  $499,313 
E)  None of the above 
A)  $1,501,600 
B)  $1,498,200 
C)  $500,687 
D)  $499,313 
E)  None of the above

Question 16

Firms keep supplies of inventory for which of the following reasons?

Accepted Answer

A)  To maintain dependence of operations 
B)  To provide a feeling of security for the workforce 
C)  To meet variation in product demand 
D)  To hedge against wage increases 
E)  In case the supplier changes the design 
A)  To maintain dependence of operations 
B)  To provide a feeling of security for the workforce 
C)  To meet variation in product demand 
D)  To hedge against wage increases 
E)  In case the supplier changes the design

Question 17

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company.You know that vendor lead time is 5 days and the number of days between reviews is 7.Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?

Accepted Answer

A)  About 27.7 
B)  About 32.8 
C)  About 35.8 
D)  About 39.9 
E)  About 45.0 
A)  About 27.7 
B)  About 32.8 
C)  About 35.8 
D)  About 39.9 
E)  About 45.0

Question 18

If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10,which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  10 
B)  20 
C)  40 
D)  100 
E)  400 
A)  10 
B)  20 
C)  40 
D)  100 
E)  400

Question 19

In a price break model of lot sizing the lowest cost quantity is always feasible.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

Using the fixed-order quantity model,what is the total ordering cost of inventory given an annual demand of 36,000 units,a cost per order of $40 and a holding cost per unit per year of $45? ______________________________________________

You should visualize inventory as stacks of money sitting on forklifts,on shelves,and in trucks and planes while in transit.

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first?

Which of the following is one of the categories of manufacturing inventory?

If the cost to change from producing one product to producing another were zero the lot size would be very small.

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

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.

In making any decision that affects the size of inventory,what are the four categories of cost that must be considered? 1. 2. 3. 4.

If annual demand is 12,000 units,the ordering cost is $6 per order and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Which of the following are fixed-order quantity inventory models?

Firms keep supplies of inventory for which of the following reasons?

If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10,which of the following is the standard deviation of usage during lead time?

In a price break model of lot sizing the lowest cost quantity is always feasible.

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

Operations and Supply Chain Management

Strategy and Sustainability

Forecasting

Strategic Capacity Management

Projects

Manufacturing and Service Processes

Service Processes

Sales and Operations Planning

Material Requirements Planning

Quality Management and Six Sigma

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Location, Logistics, and Distribution

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Exam 11: Inventory Management

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

Using the fixed-order quantity model,what is the total ordering cost of inventory given an annual demand of 36,000 units,a cost per order of $40 and a holding cost per unit per year of $45? ______________________________________________

You should visualize inventory as stacks of money sitting on forklifts,on shelves,and in trucks and planes while in transit.

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first?

Which of the following is one of the categories of manufacturing inventory?

If the cost to change from producing one product to producing another were zero the lot size would be very small.

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

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.

In making any decision that affects the size of inventory,what are the four categories of cost that must be considered? 1.__________________________________________ 2.__________________________________________ 3.__________________________________________ 4.__________________________________________

If annual demand is 12,000 units,the ordering cost is $6 per order and the holding cost is $2.50 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Which of the following are fixed-order quantity inventory models?

Firms keep supplies of inventory for which of the following reasons?

If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10,which of the following is the standard deviation of usage during lead time?

In a price break model of lot sizing the lowest cost quantity is always feasible.

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

Operations and Supply Chain Management

Strategy and Sustainability

Forecasting

Strategic Capacity Management

Projects

Manufacturing and Service Processes

Service Processes

Sales and Operations Planning

Material Requirements Planning

Quality Management and Six Sigma

Lean Supply Chains

Global Sourcing and Procurement

Location, Logistics, and Distribution

Filters

In making any decision that affects the size of inventory,what are the four categories of cost that must be considered? 1. 2. 3. 4.