Question 1

Which of the following is not a reason to carry inventory?

Accepted Answer

A)  To provide a safeguard for variation in raw material delivery time 
B)  To take advantage of economic purchase-order size 
C)  To maintain independence of operations 
D)  To meet variation in product demand 
E)  To keep the stock out of the hands of competitors 
A)  To provide a safeguard for variation in raw material delivery time 
B)  To take advantage of economic purchase-order size 
C)  To maintain independence of operations 
D)  To meet variation in product demand 
E)  To keep the stock out of the hands of competitors

Question 2

Using the ABC classification system for inventory,which of the following is a true statement?

Accepted Answer

A)  The "C" items are of moderate dollar volume 
B)  You should allocate about 50 % of the dollar volume to "B" items 
C)  The "A" items are of low dollar volume 
D)  The "A" items are of high dollar volume 
E)  Inexpensive and low usage items are classified as "C" no matter how critical 
A)  The "C" items are of moderate dollar volume 
B)  You should allocate about 50 % of the dollar volume to "B" items 
C)  The "A" items are of low dollar volume 
D)  The "A" items are of high dollar volume 
E)  Inexpensive and low usage items are classified as "C" no matter how critical

Question 3

Fixed-order quantity inventory models are "time triggered."

Accepted Answer

A) True 
 B)False

Question 4

Assuming no safety stock,what is the reorder point (R)given an average daily demand of 78 units and a lead time of 3 days?

Accepted Answer

A)  421 
B)  234 
C)  78 
D)  26 
E)  312 
A)  421 
B)  234 
C)  78 
D)  26 
E)  312

Question 5

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

Accepted Answer

A) True 
 B)False

Question 6

The costs associated with reduced inventory results in lower profits.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Assuming no safety stock,what is the re-order point (R)given an average daily demand of 50 units,a lead time of 10 days and 625 units on hand?

Accepted Answer

A)  550 
B)  500 
C)  715 
D)  450 
E)  475 
A)  550 
B)  500 
C)  715 
D)  450 
E)  475

Question 9

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

Accepted Answer

A)  1.64 
B)  1.96 
C)  2.05 
D)  2.30 
E)  None of the above 
A)  1.64 
B)  1.96 
C)  2.05 
D)  2.30 
E)  None of the above

Question 10

If annual demand is 35,000 units,the ordering cost is $50 per order and the holding cost is $0.65 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

Accepted Answer

A)  5,060 
B)  2,320 
C)  2,133 
D)  2,004 
E)  1,866 
A)  5,060 
B)  2,320 
C)  2,133 
D)  2,004 
E)  1,866

Question 11

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 12

In inventory models,high holding costs tend to favor high inventory levels.

Accepted Answer

A) True 
 B)False

Question 13

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

Accepted Answer

A) True 
 B)False

Question 14

A company wants to determine its reorder point (R).Demand is variable and they want to build a safety stock into R.If the average daily demand is 12,the lead time is 5 days,the desired "z" value is 1.96,and the standard deviation of usage during lead time is 3,which of the following is the desired value of R?

Accepted Answer

A)  About 6 
B)  About 16 
C)  About 61 
D)  About 66 
E)  About 79 
A)  About 6 
B)  About 16 
C)  About 61 
D)  About 66 
E)  About 79

Question 15

The Pareto principle is best applied to which of the following inventory systems?

Accepted Answer

A)  EOQ 
B)  Fixed-time period 
C)  ABC classification 
D)  Fixed-order quantity 
E)  Single-period ordering system 
A)  EOQ 
B)  Fixed-time period 
C)  ABC classification 
D)  Fixed-order quantity 
E)  Single-period ordering system

Question 16

Dependent demand inventory levels are usually managed by calculations using calculus-driven,cost-minimizing models.

Accepted Answer

A) True 
 B)False

Question 17

Distinguish between dependent and independent demand.How are these demands treated differently?

Accepted Answer

The text distinguishes between dependent

Question 18

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Accepted Answer

A) True 
 B)False

Question 19

A company wants to determine its reorder point (R).Demand is variable and they want to build a safety stock into R.The company wants to have a service probability coverage of 95 percent.If average daily demand is 8,lead time is 3 days,and the standard deviation of usage during lead time is 2,which of the following is the desired value of R?

Accepted Answer

A)  About 17.9 
B)  About 19.7 
C)  About 24.0 
D)  About 27.3 
E)  About 31.2 
A)  About 17.9 
B)  About 19.7 
C)  About 24.0 
D)  About 27.3 
E)  About 31.2

Question 20

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

Which of the following is not a reason to carry inventory?

Using the ABC classification system for inventory,which of the following is a true statement?

Fixed-order quantity inventory models are "time triggered."

Assuming no safety stock,what is the reorder point (R)given an average daily demand of 78 units and a lead time of 3 days?

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

The costs associated with reduced inventory results in lower profits.

Assuming no safety stock,what is the re-order point (R)given an average daily demand of 50 units,a lead time of 10 days and 625 units on hand?

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

If annual demand is 35,000 units,the ordering cost is $50 per order and the holding cost is $0.65 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

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

In inventory models,high holding costs tend to favor high inventory levels.

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

The Pareto principle is best applied to which of the following inventory systems?

Dependent demand inventory levels are usually managed by calculations using calculus-driven,cost-minimizing models.

Distinguish between dependent and independent demand.How are these demands treated differently?

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

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

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Exam 11: Inventory Management

Which of the following is not a reason to carry inventory?

Using the ABC classification system for inventory,which of the following is a true statement?

Fixed-order quantity inventory models are "time triggered."

Assuming no safety stock,what is the reorder point (R)given an average daily demand of 78 units and a lead time of 3 days?

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

The costs associated with reduced inventory results in lower profits.

Assuming no safety stock,what is the re-order point (R)given an average daily demand of 50 units,a lead time of 10 days and 625 units on hand?

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

If annual demand is 35,000 units,the ordering cost is $50 per order and the holding cost is $0.65 per unit per year,which of the following is the optimal order quantity using the fixed-order quantity model?

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

In inventory models,high holding costs tend to favor high inventory levels.

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

The Pareto principle is best applied to which of the following inventory systems?

Dependent demand inventory levels are usually managed by calculations using calculus-driven,cost-minimizing models.

Distinguish between dependent and independent demand.How are these demands treated differently?

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

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

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