Question 1

Cycle counting is an inventory control technique exclusively used for cyclical items.

Accepted Answer

A) True 
 B)False

Question 2

What is a reorder point?

Accepted Answer

A reorder point is the invento

Question 3

The reorder point is the inventory level at which action is taken to replenish the stocked item.

Accepted Answer

A) True 
 B)False

Question 4

In the basic EOQ model,if the cost of placing an order doubles,and all other values remain constant,the EOQ will:

Accepted Answer

A) increase by about 41%. 
B) increase by 100%. 
C) increase by 200%. 
D) increase,but more data is needed to say by how much. 
E) either increase or decrease. 
A) increase by about 41%. 
B) increase by 100%. 
C) increase by 200%. 
D) increase,but more data is needed to say by how much. 
E) either increase or decrease.

Question 5

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 6

Describe ABC inventory analysis in one sentence.Identify three policies that may be based upon the results of an ABC analysis.

Accepted Answer

ABC inventory analysis is a method for d

Question 7

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 8

In the simple EOQ model,if annual demand were to increase,the EOQ would increase proportionately.

Accepted Answer

A) True 
 B)False

Question 9

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 10

A certain type of computer costs $1,000,and the annual holding cost is 25% of the value of the item.Annual demand is 10,000 units,and the order cost is $150 per order.What is the approximate economic order quantity?

Accepted Answer

A) 16 
B) 70 
C) 110 
D) 183 
E) 600 
A) 16 
B) 70 
C) 110 
D) 183 
E) 600

Question 11

________ is a continuing reconciliation of inventory with inventory records.

Accepted Answer

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

Question 12

Consider a local club selling Christmas trees.If trees cost $15 and sell for $60 with no salvage value,what is the ideal service level? If salvage value is increased to $5,what is the change in service level?

Accepted Answer

Original service level = Cs/(C

Question 13

Identify the four types of inventory.

Accepted Answer

(1)raw material inventory; (2)

Question 14

In cycle counting,the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.

Accepted Answer

A) True 
 B)False

Question 15

In a safety stock problem where both demand and lead time are variable,demand averages 150 units per day with a daily standard deviation of 16,and lead time averages 5 days with a standard deviation of 1 day.What is the standard deviation of demand during lead time?

Accepted Answer

A) 15 units 
B) 100 units 
C) 154 units 
D) 500 units 
E) 13,125 units 
A) 15 units 
B) 100 units 
C) 154 units 
D) 500 units 
E) 13,125 units

Question 16

Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during lead time.The average daily demand is 70 units,the lead time is 4 days,and the standard deviation of demand during lead time is 15.
(a)How much safety stock provides a 95% service level to Thomas?
(b)What should the reorder point be?

Accepted Answer

(a)SS = 1.65 × 15 =

Question 17

What happens to the cost of safety stock when the service level increases?

Accepted Answer

Because Z increases,the amount

Question 18

Which of the following statements about ABC analysis is FALSE?

Accepted Answer

A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. 
B) In ABC analysis,"A" items should have tighter physical inventory control than "B" or "C" items have. 
C) In ABC analysis,forecasting methods for "C" items may be less sophisticated than for "A" items. 
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. 
E) Criteria other than annual dollar volume,such as high holding cost or delivery problems,can determine item classification in ABC analysis. 
A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. 
B) In ABC analysis,"A" items should have tighter physical inventory control than "B" or "C" items have. 
C) In ABC analysis,forecasting methods for "C" items may be less sophisticated than for "A" items. 
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. 
E) Criteria other than annual dollar volume,such as high holding cost or delivery problems,can determine item classification in ABC analysis.

Question 19

One function of inventory is to take advantage of quantity discounts.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a function of inventory?

Accepted Answer

A) to decouple various parts of the production process 
B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand 
C) to take advantage of quantity discounts 
D) to hedge against inflation 
E) All of the above are functions of inventory. 
A) to decouple various parts of the production process 
B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand 
C) to take advantage of quantity discounts 
D) to hedge against inflation 
E) All of the above are functions of inventory.

Exam 12: Inventory Management

Cycle counting is an inventory control technique exclusively used for cyclical items.

What is a reorder point?

The reorder point is the inventory level at which action is taken to replenish the stocked item.

In the basic EOQ model,if the cost of placing an order doubles,and all other values remain constant,the EOQ will:

Describe ABC inventory analysis in one sentence.Identify three policies that may be based upon the results of an ABC analysis.

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

In the simple EOQ model,if annual demand were to increase,the EOQ would increase proportionately.

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

A certain type of computer costs $1,000,and the annual holding cost is 25% of the value of the item.Annual demand is 10,000 units,and the order cost is $150 per order.What is the approximate economic order quantity?

________ is a continuing reconciliation of inventory with inventory records.

Consider a local club selling Christmas trees.If trees cost $15 and sell for $60 with no salvage value,what is the ideal service level? If salvage value is increased to $5,what is the change in service level?

Identify the four types of inventory.

In cycle counting,the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.

In a safety stock problem where both demand and lead time are variable,demand averages 150 units per day with a daily standard deviation of 16,and lead time averages 5 days with a standard deviation of 1 day.What is the standard deviation of demand during lead time?

What happens to the cost of safety stock when the service level increases?

Which of the following statements about ABC analysis is FALSE?

One function of inventory is to take advantage of quantity discounts.

Which of the following is a function of inventory?

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