Question 1

ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

Accepted Answer

A) True 
 B)False

Question 2

If the standard deviation of demand is six per week,demand is 50 per week,and the desired service level is 95%,approximately what is the statistical safety stock?

Accepted Answer

A) 8 units 
B) 10 units 
C) 16 units 
D) 64 units 
E) Cannot be determined without lead time data. 
A) 8 units 
B) 10 units 
C) 16 units 
D) 64 units 
E) Cannot be determined without lead time data.

Question 3

What is a fixed-period system?

Accepted Answer

It is a system in wh

Question 4

Among the advantages of cycle counting is that it:

Accepted Answer

A) makes the annual physical inventory more acceptable to management. 
B) does not require the detailed records necessary when annual physical inventory is used. 
C) does not require highly trained people. 
D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory. 
E) does not need to be performed for less expensive items. 
A) makes the annual physical inventory more acceptable to management. 
B) does not require the detailed records necessary when annual physical inventory is used. 
C) does not require highly trained people. 
D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory. 
E) does not need to be performed for less expensive items.

Question 5

A toy manufacturer makes its own wind-up motors,which are then put into its toys.While the toy manufacturing process is continuous,the motors are intermittent flow.Data on the manufacture of the motors appears below.
Annual demand (D)= 50,000 units Daily subassembly production rate = 1,000
Setup cost (S)= $85 per batch Daily subassembly usage rate = 200
Carrying cost = $.20 per unit per year
(a)To minimize cost,how large should each batch of subassemblies be?
(b)Approximately how many days are required to produce a batch?
(c)How long is a complete cycle?
(d)What is the average inventory for this problem?
(e)What is the total annual inventory cost (holding plus setup)of the optimal behavior in this problem?

Accepted Answer

(a)Q*p = @#IMG-DLM& = 7288.7 or 7289 units. (b)It

Question 6

________ is extra stock that is carried to serve as a buffer.

Accepted Answer

The answer of ________ is extra stock that is carried...

Question 7

If setup costs are reduced by substantial reductions in setup time,the production order quantity is also reduced.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following items is mostly likely managed using a single-period order model?

Accepted Answer

A) Christmas trees 
B) canned food at the grocery store 
C) automobiles at a dealership 
D) metal for a manufacturing process 
E) gas sold to a gas station 
A) Christmas trees 
B) canned food at the grocery store 
C) automobiles at a dealership 
D) metal for a manufacturing process 
E) gas sold to a gas station

Question 9

An inventory decision rule states,"When the inventory level goes down to 14 gearboxes,100 gearboxes will be ordered." Which of the following statements is TRUE?

Accepted Answer

A) One hundred is the reorder point,and 14 is the order quantity. 
B) Fourteen is the reorder point,and 100 is the order quantity. 
C) The number 100 is a function of demand during lead time. 
D) Fourteen is the safety stock,and 100 is the reorder point. 
E) None of the above is true. 
A) One hundred is the reorder point,and 14 is the order quantity. 
B) Fourteen is the reorder point,and 100 is the order quantity. 
C) The number 100 is a function of demand during lead time. 
D) Fourteen is the safety stock,and 100 is the reorder point. 
E) None of the above is true.

Question 10

In some inventory models,the optimal behavior occurs where ordering costs and carrying costs are equal to one another.Provide an example of a model where this rule does not hold; explain how the model's results are optimal anyway.

Accepted Answer

This rule will not hold in all instances

Question 11

________ is a continuing reconciliation of inventory with inventory records.

Accepted Answer

The answer of ________ is a continuing reconciliation of inventory...

Question 12

Average daily demand for a product is normally distributed with a mean of 20 units and a standard deviation of 3 units.Lead time is fixed at 25 days.What reorder point provides for a service level of 95 percent?

Accepted Answer

ROP = DL + Z × σd ×

Question 13

Define service level.

Accepted Answer

The service level is the proba

Question 14

ABC analysis classifies inventoried items into three groups,usually based on annual units or quantities used.

Accepted Answer

A) True 
 B)False

Question 15

Which of these statements about the production order quantity model is FALSE?

Accepted Answer

A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met,except that receipt is noninstantaneous. 
B) Because receipt is noninstantaneous,some units are used immediately and not stored in inventory. 
C) Average inventory is less than one-half of the production order quantity. 
D) All else equal,the smaller the ratio of demand rate to production rate,the larger is the production order quantity. 
E) None of the above is false. 
A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met,except that receipt is noninstantaneous. 
B) Because receipt is noninstantaneous,some units are used immediately and not stored in inventory. 
C) Average inventory is less than one-half of the production order quantity. 
D) All else equal,the smaller the ratio of demand rate to production rate,the larger is the production order quantity. 
E) None of the above is false.

Question 16

Daily demand for a product is normally distributed with a mean of 150 units and a standard deviation of 15 units.The firm currently uses a reorder point system,and it seeks a 75% service level during the lead time of 6 days.
a.What safety stock is appropriate for the firm?
b.What is the reorder point?

Accepted Answer

a.SS = 0.67 × 15 × @#IMG-DLM&

Question 17

A disadvantage of the fixed-period inventory system is that:

Accepted Answer

A) it involves higher ordering costs than the fixed quantity inventory system. 
B) additional inventory records are required. 
C) the average inventory level is decreased. 
D) since there is no count of inventory during the review period,a stockout is possible. 
E) orders usually are for larger quantities. 
A) it involves higher ordering costs than the fixed quantity inventory system. 
B) additional inventory records are required. 
C) the average inventory level is decreased. 
D) since there is no count of inventory during the review period,a stockout is possible. 
E) orders usually are for larger quantities.

Question 18

Which of the following statements regarding the reorder point is TRUE?

Accepted Answer

A) The reorder point is that quantity that triggers an action to restock an item. 
B) There is a reorder point even if lead time and demand during lead time are constant. 
C) The reorder point is larger than d × L if safety stock is present. 
D) A shorter lead time implies a smaller reorder point. 
E) All of the above are true. 
A) The reorder point is that quantity that triggers an action to restock an item. 
B) There is a reorder point even if lead time and demand during lead time are constant. 
C) The reorder point is larger than d × L if safety stock is present. 
D) A shorter lead time implies a smaller reorder point. 
E) All of the above are true.

Question 19

What are the assumptions of the EOQ model?

Accepted Answer

(1)Demand for an item is known,reasonabl

Question 20

The soft goods department of a large department store sells 175 units per month of a certain large bath towel.The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00.The store uses an inventory carrying charge of I = 27% per year.Determine (a)the optimal order quantity,(b)the order frequency,and (c)the annual holding and setup cost.If,through automation of the purchasing process,the ordering cost can be cut to $4.00,what will be (d)the new economic order quantity,(e)the order frequency,and (f)annual holding and setup costs? Explain these results.

Accepted Answer

Annual demand is 175 × 12 = 2100. (a)Q*

Exam 13: Inventory Management

ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

If the standard deviation of demand is six per week,demand is 50 per week,and the desired service level is 95%,approximately what is the statistical safety stock?

What is a fixed-period system?

Among the advantages of cycle counting is that it:

________ is extra stock that is carried to serve as a buffer.

If setup costs are reduced by substantial reductions in setup time,the production order quantity is also reduced.

Which of the following items is mostly likely managed using a single-period order model?

An inventory decision rule states,"When the inventory level goes down to 14 gearboxes,100 gearboxes will be ordered." Which of the following statements is TRUE?

In some inventory models,the optimal behavior occurs where ordering costs and carrying costs are equal to one another.Provide an example of a model where this rule does not hold; explain how the model's results are optimal anyway.

________ is a continuing reconciliation of inventory with inventory records.

Average daily demand for a product is normally distributed with a mean of 20 units and a standard deviation of 3 units.Lead time is fixed at 25 days.What reorder point provides for a service level of 95 percent?

Define service level.

ABC analysis classifies inventoried items into three groups,usually based on annual units or quantities used.

Which of these statements about the production order quantity model is FALSE?

A disadvantage of the fixed-period inventory system is that:

Which of the following statements regarding the reorder point is TRUE?

What are the assumptions of the EOQ model?

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Process Strategy

Capacity and Constraint Management

Location Strategies

Layout Strategies

Human Resources, job Design, and Work Measurement

Supply Chain Management

Aggregate Planning and Sop

Material Requirements Planning Mrpand Erp

Short-Term Scheduling

Jit, tps, and Lean Operations

Maintenance and Reliability

Sustainability in the Supply Chain

Statistical Process Control

Supply Chain Management Analytics

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters