Question 1

With JIT manufacturing, finished goods inventories are

Accepted Answer

A)  kept high to avoid stockouts. 
B)  held in various locations for faster delivery to customers. 
C)  insignificant. 
D)  kept high to let the company take advantage of volume discounts. 
A)  kept high to avoid stockouts. 
B)  held in various locations for faster delivery to customers. 
C)  insignificant. 
D)  kept high to let the company take advantage of volume discounts.

Question 2

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure.The JIT solution is to

Accepted Answer

A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control. 
A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control.

Question 3

The reorder point in the EOQ model is

Accepted Answer

A)  the day of the month for reordering. 
B)  when all of the inventory has been used. 
C)  when the inventory level is below the order quantity. 
D)  the inventory level at which an order for additional units is placed. 
A)  the day of the month for reordering. 
B)  when all of the inventory has been used. 
C)  when the inventory level is below the order quantity. 
D)  the inventory level at which an order for additional units is placed.

Question 4

Figure 20-4 Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively.Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
 
- Refer to Figure 20-4.What is the constraint on labor hours for Heft Company?

Accepted Answer

A)  5A + 1B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500 
A)  5A + 1B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500

Question 5

Big Bus Company produces buses.In order to produce the seats for the buses, special equipment must be set up.The setup cost per frame is $40.The cost of carrying seats in inventory is $5 per seat per year.The company produces 100,000 buses per year. Total carrying costs (rounded to the nearest dollar) associated with the economic order quantity are

Accepted Answer

A)  $3,613. 
B)  $3,163. 
C)  $506. 
D)  $316. 
A)  $3,613. 
B)  $3,163. 
C)  $506. 
D)  $316.

Question 6

Figure 20 - 5 The following information is available for Wilson Trailer Company, which sells two products:
  There are 100 hours available in the plant and 75 square feet of vinyl available per operating period.
-
Refer to Figure 20-5.What is the objective function for maximizing profits?

Accepted Answer

A)  Maximize $15A + $30B 
B)  Maximize $50A + $80B 
C)  Maximize $35A + $50B 
D)  Minimize $15A + $30B 
A)  Maximize $15A + $30B 
B)  Maximize $50A + $80B 
C)  Maximize $35A + $50B 
D)  Minimize $15A + $30B

Question 7

The cost of acquiring inventory includes

Accepted Answer

A)  setup costs for goods produced internally. 
B)  cost of insurance on the warehouse for inventory. 
C)  cost of not having a product when a customer wants one. 
D)  cost of obsolescence. 
A)  setup costs for goods produced internally. 
B)  cost of insurance on the warehouse for inventory. 
C)  cost of not having a product when a customer wants one. 
D)  cost of obsolescence.

Question 8

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases.The JIT solution is to

Accepted Answer

A)  reduce setup costs. 
B)  reduce lead time. 
C)  use long-term contracts with suppliers. 
D)  use total quality control. 
A)  reduce setup costs. 
B)  reduce lead time. 
C)  use long-term contracts with suppliers. 
D)  use total quality control.

Question 9

JIT reduces lead times to meet delivery dates by

Accepted Answer

A)  reducing setup times. 
B)  expediting delivery to customers. 
C)  having more inventory available. 
D)  working overtime to fill orders. 
A)  reducing setup times. 
B)  expediting delivery to customers. 
C)  having more inventory available. 
D)  working overtime to fill orders.

Question 10

Which of the following is TRUE about the theory of constraints?

Accepted Answer

A)  TOC recognizes that EOQ is important. 
B)  TOC recognizes that lowering inventory decreases carrying costs and thus decreases operating expenses and improves net income. 
C)  TOC recognizes that lower inventories mean more defects. 
D)  TOC recognizes that lower inventories mean slower response to customers. 
A)  TOC recognizes that EOQ is important. 
B)  TOC recognizes that lowering inventory decreases carrying costs and thus decreases operating expenses and improves net income. 
C)  TOC recognizes that lower inventories mean more defects. 
D)  TOC recognizes that lower inventories mean slower response to customers.

Question 11

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

Accepted Answer

A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban. 
A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban.

Question 12

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows:
  
-What is the equation for the constraint on direct labor?

Accepted Answer

A)  $1X + $2Y £ 300 
B)  $4X + $2Y £ 100 
C)  $4X + $5Y £ 100 
D)  $4X + $2Y £ 300 
A)  $1X + $2Y £ 300 
B)  $4X + $2Y £ 100 
C)  $4X + $5Y £ 100 
D)  $4X + $2Y £ 300

Question 13

The JIT approach to inventory management

Accepted Answer

A)  allows greater flexibility as to when products can be manufactured. 
B)  results in higher inventory levels but reduces ordering and setup costs. 
C)  results in lower inventory carrying costs. 
D)  none of these. 
A)  allows greater flexibility as to when products can be manufactured. 
B)  results in higher inventory levels but reduces ordering and setup costs. 
C)  results in lower inventory carrying costs. 
D)  none of these.

Question 14

The correct order for the four steps that must be followed to solve problems graphically is

Accepted Answer

A)  Graph each constraint, Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
B)  Identify the feasible set of solutions, Graph each constraint, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
C)  Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Graph each constraint, Select the corner point that yields the largest value for the objective function. 
D)  Graph each constraint, Identify all the corner-point values in the feasible set, Identify the feasible set of solutions, Select the corner point that yields the largest value for the objective function. 
A)  Graph each constraint, Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
B)  Identify the feasible set of solutions, Graph each constraint, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
C)  Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Graph each constraint, Select the corner point that yields the largest value for the objective function. 
D)  Graph each constraint, Identify all the corner-point values in the feasible set, Identify the feasible set of solutions, Select the corner point that yields the largest value for the objective function.

Question 15

Strategic objectives of JIT include

Accepted Answer

A)  increasing profits. 
B)  improving a firm's competitive position. 
C)  increasing inventory. 
D)  both a and b. 
A)  increasing profits. 
B)  improving a firm's competitive position. 
C)  increasing inventory. 
D)  both a and b.

Question 16

JIT avoids shutdowns due to materials shortage in all of the following ways EXCEPT

Accepted Answer

A)  using total preventive maintenance. 
B)  holding inventory. 
C)  using total quality control to reduce defective materials. 
D)  working with suppliers to ensure the availability of materials. 
A)  using total preventive maintenance. 
B)  holding inventory. 
C)  using total quality control to reduce defective materials. 
D)  working with suppliers to ensure the availability of materials.

Question 17

The ordering of small, frequent orders

Accepted Answer

A)  minimizes stockout costs. 
B)  minimizes ordering costs. 
C)  minimizes carrying costs. 
D)  minimizes all three. 
A)  minimizes stockout costs. 
B)  minimizes ordering costs. 
C)  minimizes carrying costs. 
D)  minimizes all three.

Question 18

Burley Company has the following information available concerning one of its inventory items:   
-The reorder point for the inventory item is

Accepted Answer

A)  200 units. 
B)  970 units. 
C)  320 units. 
D)  500 units. 
A)  200 units. 
B)  970 units. 
C)  320 units. 
D)  500 units.

Question 19

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows:
 
- What is the equation for the constraint on materials?

Accepted Answer

A)  $1X + $2Y £ 100 
B)  $4X + $2Y £ 100 
C)  $4X + $5Y £ 100 
D)  $4X + $5Y £ 300 
A)  $1X + $2Y £ 100 
B)  $4X + $2Y £ 100 
C)  $4X + $5Y £ 100 
D)  $4X + $5Y £ 300

Question 20

Loose constraints are best defined as

Accepted Answer

A)  a constraint where the limiting factor is machine hours or labor availability. 
B)  a constraint where the limiting factor could be something like market demand. 
C)  a constraint where a product mix uses all of the limited resources of the constraint. 
D)  a constraint whose limited resources are not fully used by a product mix. 
A)  a constraint where the limiting factor is machine hours or labor availability. 
B)  a constraint where the limiting factor could be something like market demand. 
C)  a constraint where a product mix uses all of the limited resources of the constraint. 
D)  a constraint whose limited resources are not fully used by a product mix.

With JIT manufacturing, finished goods inventories are

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure.The JIT solution is to

The reorder point in the EOQ model is

Figure 20 - 5 The following information is available for Wilson Trailer Company, which sells two products: There are 100 hours available in the plant and 75 square feet of vinyl available per operating period. - Refer to Figure 20-5.What is the objective function for maximizing profits?

The cost of acquiring inventory includes

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases.The JIT solution is to

JIT reduces lead times to meet delivery dates by

Which of the following is TRUE about the theory of constraints?

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: -What is the equation for the constraint on direct labor?

The JIT approach to inventory management

The correct order for the four steps that must be followed to solve problems graphically is

Strategic objectives of JIT include

JIT avoids shutdowns due to materials shortage in all of the following ways EXCEPT

The ordering of small, frequent orders

Burley Company has the following information available concerning one of its inventory items: -The reorder point for the inventory item is

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: - What is the equation for the constraint on materials?

Loose constraints are best defined as

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters

Exam 20: Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

With JIT manufacturing, finished goods inventories are

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure.The JIT solution is to

The reorder point in the EOQ model is

Figure 20 - 5 The following information is available for Wilson Trailer Company, which sells two products: There are 100 hours available in the plant and 75 square feet of vinyl available per operating period. - Refer to Figure 20-5.What is the objective function for maximizing profits?

The cost of acquiring inventory includes

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases.The JIT solution is to

JIT reduces lead times to meet delivery dates by

Which of the following is TRUE about the theory of constraints?

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: -What is the equation for the constraint on direct labor?

The JIT approach to inventory management

The correct order for the four steps that must be followed to solve problems graphically is

Strategic objectives of JIT include

JIT avoids shutdowns due to materials shortage in all of the following ways EXCEPT

The ordering of small, frequent orders

Burley Company has the following information available concerning one of its inventory items: -The reorder point for the inventory item is

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: - What is the equation for the constraint on materials?

Loose constraints are best defined as

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters