Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which one of the following statements regarding the economic order quantity is true?

Accepted Answer

A) The EOQ model combines several different item orders to the same supplier. 
B) If an order quantity is larger than the EOQ,the annual holding cost exceeds the annual ordering cost. 
C) The EOQ model assumes a variable demand pattern. 
D) When the interest rate drops,both the holding cost and the EOQ decreases. 
E) EOQ is used to determine the optimum shipping quantity. 
A) The EOQ model combines several different item orders to the same supplier. 
B) If an order quantity is larger than the EOQ,the annual holding cost exceeds the annual ordering cost. 
C) The EOQ model assumes a variable demand pattern. 
D) When the interest rate drops,both the holding cost and the EOQ decreases. 
E) EOQ is used to determine the optimum shipping quantity.

Question 3

Which of the following is a disadvantage of excessive inventory?

Accepted Answer

A) it creates an unnecessary waste of scarce resources. 
B) It leads to higher inventory ordering cost. 
C) It leads to lower average inventory. 
D) It eliminates cycle stock. 
E) It reduces the need to conduct cycle count. 
A) it creates an unnecessary waste of scarce resources. 
B) It leads to higher inventory ordering cost. 
C) It leads to lower average inventory. 
D) It eliminates cycle stock. 
E) It reduces the need to conduct cycle count.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following cannot be considered as independent demand items?

Accepted Answer

A) wholesale and retail merchandise items 
B) maintenance,repair,and operating supplies at a manufacturing company 
C) maintenance,repair,and operating supplies at a service firm 
D) raw material items that become part of the final product at a manufacturing firm 
E) service industry items such as hospital supplies or office supplies for law firms 
A) wholesale and retail merchandise items 
B) maintenance,repair,and operating supplies at a manufacturing company 
C) maintenance,repair,and operating supplies at a service firm 
D) raw material items that become part of the final product at a manufacturing firm 
E) service industry items such as hospital supplies or office supplies for law firms

Question 6

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 7

Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs.

Accepted Answer

A) True 
 B)False

Question 8

The ABC inventory control system categorizes inventory items into three groups,A,B,and C.A items are given highest priority,while C items have the lowest priority.Prioritization may be based on annual dollar usage,shelf life,or sales volume.

Accepted Answer

A) True 
 B)False

Question 9

If an item is ordered at its economic order quantity,the annual carrying cost should be:

Accepted Answer

A) slightly less than the annual ordering cost. 
B) equal to the annual ordering cost. 
C) twice the annual purchase price. 
D) the square root of the annual ordering cost. 
E) cannot be determined because there is insufficient information provided. 
A) slightly less than the annual ordering cost. 
B) equal to the annual ordering cost. 
C) twice the annual purchase price. 
D) the square root of the annual ordering cost. 
E) cannot be determined because there is insufficient information provided.

Question 10

If your company had an annual purchase cost of items equal to $2,000,000,an annual holding cost of $150,000 and an annual ordering cost of $750,000 this scenario would reveal that:

Accepted Answer

A) Your fixed lot size was lower than the EOQ 
B) Your fixed lot size was equal to the EOQ 
C) Your fixed lot size was higher than the EOQ 
D) Nothing because there is insufficient information to discern where the EOQ would be. 
A) Your fixed lot size was lower than the EOQ 
B) Your fixed lot size was equal to the EOQ 
C) Your fixed lot size was higher than the EOQ 
D) Nothing because there is insufficient information to discern where the EOQ would be.

Question 11

When demand and delivery lead time are known and constant,reorder point is the ____.

Accepted Answer

A) demand during lead time 
B) safety stock 
C) sum of demand during lead time and safety stock 
D) economic order quantity 
E) average inventory 
A) demand during lead time 
B) safety stock 
C) sum of demand during lead time and safety stock 
D) economic order quantity 
E) average inventory

Question 12

The UNLV Bookstore sells a unique calculator to college students.The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day.The lead time for this calculator is very stable at 9 days.Compute the statistical reorder point that results in a 95 percent in-stock probability (Z = 1.65).

Accepted Answer

A) 19.8 units 
B) 80 units 
C) 180 units 
D) 199.8 units 
E) 720 units 
A) 19.8 units 
B) 80 units 
C) 180 units 
D) 199.8 units 
E) 720 units

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Use this information below to calculate the optimal order quantity:
Annual demand for backpacks is 43,000 units
The cost to place an order is $220
The per unit cost of the item is $60.00
The 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

Question 15

Which of the following is not an example of an ordering cost for products purchased from a supplier?

Accepted Answer

A) the cost of transmitting the order 
B) the cost of receiving the product 
C) the cost associated with processing the invoice 
D) the cost of pilferage while in storage 
E) the cost of clerical staff for preparing the purchase 
A) the cost of transmitting the order 
B) the cost of receiving the product 
C) the cost associated with processing the invoice 
D) the cost of pilferage while in storage 
E) the cost of clerical staff for preparing the purchase

Question 16

The EOQ model with quantity discounts attempts to determine

Accepted Answer

A) what is the lowest purchasing price. 
B) whether to use fixed-quantity or fixed period order policy. 
C) how many units should be ordered. 
D) what is the shortest lead time. 
E) what is the lowest amount of inventory necessary to satisfy a certain service level. 
A) what is the lowest purchasing price. 
B) whether to use fixed-quantity or fixed period order policy. 
C) how many units should be ordered. 
D) what is the shortest lead time. 
E) what is the lowest amount of inventory necessary to satisfy a certain service level.

Question 17

An RFID reader does not require direct line of sight to read the information stored in an RFID tag.

Accepted Answer

A) True 
 B)False

Question 18

The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period.Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

Accepted Answer

A) True 
 B)False

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

Which one of the following statements regarding the economic order quantity is true?

Which of the following is a disadvantage of excessive inventory?

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

Which of the following cannot be considered as independent demand items?

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.

Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs.

The ABC inventory control system categorizes inventory items into three groups,A,B,and C.A items are given highest priority,while C items have the lowest priority.Prioritization may be based on annual dollar usage,shelf life,or sales volume.

If an item is ordered at its economic order quantity,the annual carrying cost should be:

If your company had an annual purchase cost of items equal to $2,000,000,an annual holding cost of $150,000 and an annual ordering cost of $750,000 this scenario would reveal that:

When demand and delivery lead time are known and constant,reorder point is the ____.

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

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

Which of the following is not an example of an ordering cost for products purchased from a supplier?

The EOQ model with quantity discounts attempts to determine

An RFID reader does not require direct line of sight to read the information stored in an RFID tag.

The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis.

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

Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period.Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

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

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

Which one of the following statements regarding the economic order quantity is true?

Which of the following is a disadvantage of excessive inventory?

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

Which of the following cannot be considered as independent demand items?

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.

Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs.

The ABC inventory control system categorizes inventory items into three groups,A,B,and C.A items are given highest priority,while C items have the lowest priority.Prioritization may be based on annual dollar usage,shelf life,or sales volume.

If an item is ordered at its economic order quantity,the annual carrying cost should be:

If your company had an annual purchase cost of items equal to $2,000,000,an annual holding cost of $150,000 and an annual ordering cost of $750,000 this scenario would reveal that:

When demand and delivery lead time are known and constant,reorder point is the ____.

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

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

Which of the following is not an example of an ordering cost for products purchased from a supplier?

The EOQ model with quantity discounts attempts to determine

An RFID reader does not require direct line of sight to read the information stored in an RFID tag.

The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis.

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

Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period.Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

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