Question 1

How sensitive is the EOQ to variations in demand or costs?

Accepted Answer

The EOQ is relatively insensitive to sma

Question 2

The main trait of a single-period model is that:

Accepted Answer

A) inventory has limited value after a certain period of time. 
B) it has the largest EOQ sizes. 
C) the order quantity should usually equal the expected value of demand. 
D) supply is limited. 
E) the cost of a shortage cannot be determined accurately. 
A) inventory has limited value after a certain period of time. 
B) it has the largest EOQ sizes. 
C) the order quantity should usually equal the expected value of demand. 
D) supply is limited. 
E) the cost of a shortage cannot be determined accurately.

Question 3

In the simple EOQ model,if the carrying cost were to double,the EOQ would also double.

Accepted Answer

A) True 
 B)False

Question 4

Given the following data: D = 65,000 units per year,S = $120 per setup,P = $5 per unit,and I = 25% per year, (a)calculate the EOQ,and (b)calculate annual costs of holding and setup following EOQ behavior.

Accepted Answer

(a)Q* = @#IMG-DLM& = 3532.7 un

Question 5

What are the four functions of inventory?

Accepted Answer

(1)to provide a selection of goods for a

Question 6

What is cycle counting?

Accepted Answer

Cycle counting is a

Question 7

Identify three techniques to control service inventories.

Accepted Answer

(1)good personnel selection,tr

Question 8

Cycle counting:

Accepted Answer

A) is a process by which inventory records are verified once a year. 
B) eliminates annual inventory adjustments. 
C) provides a measure of inventory turnover. 
D) assumes that all inventory records must be verified with the same frequency. 
E) assumes that the most frequently used items must be counted more frequently. 
A) is a process by which inventory records are verified once a year. 
B) eliminates annual inventory adjustments. 
C) provides a measure of inventory turnover. 
D) assumes that all inventory records must be verified with the same frequency. 
E) assumes that the most frequently used items must be counted more frequently.

Question 9

Which of the following should be higher in P systems than Q systems?

Accepted Answer

A) lead time 
B) demand 
C) order size 
D) order spacing 
E) safety stock 
A) lead time 
B) demand 
C) order size 
D) order spacing 
E) safety stock

Question 10

Identify several forms of quantity discounts other than the standard all-units quantity discount.

Accepted Answer

incremental quantity discounts

Question 11

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Accepted Answer

A) True 
 B)False

Question 12

Demand for a product is approximately normal,averaging 5 units per day with a standard deviation of 1 unit per day.Lead time for this product is approximately normal,averaging 10 days with a standard deviation of 3 days.What reorder point provides a service level of 90 percent?

Accepted Answer

This problem requires formula (12-17),si

Question 13

An organization has had a policy of ordering 70 units at a time.Their annual demand is 340 units,and the item has an annual carrying cost of $2.The assumptions of the EOQ are thought to apply.For what value of ordering cost would this order size be optimal?

Accepted Answer

Start with the econo

Question 14

The purpose of safety stock is to:

Accepted Answer

A) replace failed units with good ones. 
B) eliminate the possibility of a stockout. 
C) eliminate the likelihood of a stockout due to erroneous inventory tally. 
D) control the likelihood of a stockout due to variable demand and/or lead time. 
E) protect the firm from a sudden decrease in demand. 
A) replace failed units with good ones. 
B) eliminate the possibility of a stockout. 
C) eliminate the likelihood of a stockout due to erroneous inventory tally. 
D) control the likelihood of a stockout due to variable demand and/or lead time. 
E) protect the firm from a sudden decrease in demand.

Question 15

At the economic order quantity,holding costs are equal to product costs.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Daily demand for a product is normally distributed with a mean of 200 units and a standard deviation of 20 units.The firm currently uses a reorder point system,with a lead time of 4 days.
(a)What safety stock provides a 50% service level?
(b)What safety stock provides a 90% service level?
(c)What safety stock provides a 99% service level?

Accepted Answer

Standard deviation during lead

Question 18

In a quantity discount problem,if the savings in annual product cost is smaller than the increase in the sum of annual setup cost and annual holding cost,the discount should be ________.

Accepted Answer

The answer of In a quantity discount problem,if the savings...

Question 19

Which of the following statements regarding control of service inventories is TRUE?

Accepted Answer

A) Service inventory is a fictional concept,because services are intangible. 
B) Service inventory needs no safety stock,because there's no such thing as a service stockout. 
C) Effective control of all goods leaving the facility is one applicable technique. 
D) Service inventory has carrying costs but no setup costs. 
E) Good personnel selection,training,and discipline are easy. 
A) Service inventory is a fictional concept,because services are intangible. 
B) Service inventory needs no safety stock,because there's no such thing as a service stockout. 
C) Effective control of all goods leaving the facility is one applicable technique. 
D) Service inventory has carrying costs but no setup costs. 
E) Good personnel selection,training,and discipline are easy.

Question 20

________ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

Accepted Answer

The answer of ________ is a method for dividing on-hand...

Exam 12: Inventory Management

How sensitive is the EOQ to variations in demand or costs?

The main trait of a single-period model is that:

In the simple EOQ model,if the carrying cost were to double,the EOQ would also double.

Given the following data: D = 65,000 units per year,S = $120 per setup,P = $5 per unit,and I = 25% per year, (a)calculate the EOQ,and (b)calculate annual costs of holding and setup following EOQ behavior.

What are the four functions of inventory?

What is cycle counting?

Identify three techniques to control service inventories.

Cycle counting:

Which of the following should be higher in P systems than Q systems?

Identify several forms of quantity discounts other than the standard all-units quantity discount.

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Demand for a product is approximately normal,averaging 5 units per day with a standard deviation of 1 unit per day.Lead time for this product is approximately normal,averaging 10 days with a standard deviation of 3 days.What reorder point provides a service level of 90 percent?

An organization has had a policy of ordering 70 units at a time.Their annual demand is 340 units,and the item has an annual carrying cost of $2.The assumptions of the EOQ are thought to apply.For what value of ordering cost would this order size be optimal?

The purpose of safety stock is to:

At the economic order quantity,holding costs are equal to product costs.

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

In a quantity discount problem,if the savings in annual product cost is smaller than the increase in the sum of annual setup cost and annual holding cost,the discount should be ________.

Which of the following statements regarding control of service inventories is TRUE?

________ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

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