Question 1

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The cost-minimizing solution for this product is to order:

Accepted Answer

A) all 4000 units at one time. 
B) 200 units per order. 
C) every 20 days. 
D) 10 times per year. 
E) none of the above 
A) all 4000 units at one time. 
B) 200 units per order. 
C) every 20 days. 
D) 10 times per year. 
E) none of the above

Question 2

In some inventory models,the optimal behavior occurs when 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 3

Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

Accepted Answer

A) True 
 B)False

Question 4

A local club is selling Christmas trees and deciding how many to stock for the month of December.If demand is normally distributed with a mean of 100 and standard deviation of 20,trees have no salvage value at the end of the month,trees cost $20,and trees sell for $50 what is the service level?

Accepted Answer

A) .60 
B) .20 
C) .84 
D) .40 
E) unable to determine given the above information 
A) .60 
B) .20 
C) .84 
D) .40 
E) unable to determine given the above information

Question 5

Q is to ________ systems as P is to ________ systems.

Accepted Answer

A) fixed quantity,fixed period 
B) variable demand,constant demand 
C) variable lead time,variable demand 
D) variable quantity,variable period 
E) quality,price 
A) fixed quantity,fixed period 
B) variable demand,constant demand 
C) variable lead time,variable demand 
D) variable quantity,variable period 
E) quality,price

Question 6

Identify the typical cost components that constitute ordering costs in inventory systems.

Accepted Answer

Typical components of ordering

Question 7

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

Accepted Answer

A) True 
 B)False

Question 8

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*

Question 9

The fixed-period inventory system requires more safety stock than a fixed-quantity system because:

Accepted Answer

A) a stockout can occur during the review period as well as during the lead time. 
B) this model is used for products that have large standard deviations of demand. 
C) this model is used for products that require very high service levels. 
D) replenishment is not instantaneous. 
E) setup costs and holding costs are large. 
A) a stockout can occur during the review period as well as during the lead time. 
B) this model is used for products that have large standard deviations of demand. 
C) this model is used for products that require very high service levels. 
D) replenishment is not instantaneous. 
E) setup costs and holding costs are large.

Question 10

In the production order quantity model,inventory does not arrive in a single moment but flows in at a steady rate,resulting in a larger production/order quantity than in an otherwise identical EOQ problem.

Accepted Answer

A) True 
 B)False

Question 11

Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones?

Accepted Answer

A) housing costs 
B) material handling costs 
C) labor cost 
D) investment costs 
E) pilferage,scrap,and obsolescence 
A) housing costs 
B) material handling costs 
C) labor cost 
D) investment costs 
E) pilferage,scrap,and obsolescence

Question 12

Consider two inventory problems with identical demand,holding cost,and setup cost.In one,goods arrive instantly,but in the other goods arrive at a measurable rate.Which of these problems will have the larger optimal order quantity? Why?

Accepted Answer

The problem with instantaneous delivery

Question 13

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then ________ is variable and ________ is constant.

Accepted Answer

The answer of If a safety stock problem includes parameters...

Question 14

A product has a reorder point of 110 units,and is ordered four times a year on average.The following table shows the historical distribution of demand values observed during lead time.
   Managers have noted that stockouts occur 30 percent of the time with this policy,and they question whether a change in inventory policy,to include some safety stock,might be an improvement.The managers realize that any safety stock would increase the service level,but they are worried about the increased costs of carrying the safety stock.Currently,stockouts are valued at $20 per unit per occurrence,while inventory carrying costs are $10 per unit per year.What is your advice? Do higher levels of safety stock add to total costs,or not? What level of safety stock is best?

Accepted Answer

@#IMG-DLM& The cheapest inventory policy

Question 15

The inventory management costs for a certain product are S = $8 to order,and H = $1 to hold for a year.Annual demand is 2400 units.Consider the following ordering plans: (a)order all 2400 at one time, (b)order 600 once each quarter,and (c)order 200 once each month.Calculate the annual holding and setup costs associated with each plan.(d)Is there another plan,cheaper than any of these? Calculate this order quantity along with its total annual holding and setup costs.

Accepted Answer

(a)TC2400 = 1($8)+ @#IMG-DLM& ($1)= $120

Question 16

Central University uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year.The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price.How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?

Accepted Answer

First,calculate the EOQ from the data pr

Question 17

A product whose EOQ is 400 units experiences a 50% increase in demand.The new EOQ is:

Accepted Answer

A) unchanged. 
B) increased by less than 50%. 
C) increased by 50%. 
D) increased by more than 50%. 
E) cannot be determined 
A) unchanged. 
B) increased by less than 50%. 
C) increased by 50%. 
D) increased by more than 50%. 
E) cannot be determined

Question 18

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order.The revised EOQ is:

Accepted Answer

A) three times as large. 
B) one-third as large. 
C) nine times as large. 
D) one-ninth as large. 
E) cannot be determined 
A) three times as large. 
B) one-third as large. 
C) nine times as large. 
D) one-ninth as large. 
E) cannot be determined

Question 19

Describe the difference between a fixed-quantity and a fixed-period inventory system?

Accepted Answer

In a fixed-quantity inventory system,whe

Question 20

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

Accepted Answer

warehouse

Exam 12: Inventory Management

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The cost-minimizing solution for this product is to order:

In some inventory models,the optimal behavior occurs when 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.

Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

A local club is selling Christmas trees and deciding how many to stock for the month of December.If demand is normally distributed with a mean of 100 and standard deviation of 20,trees have no salvage value at the end of the month,trees cost $20,and trees sell for $50 what is the service level?

Q is to ________ systems as P is to ________ systems.

Identify the typical cost components that constitute ordering costs in inventory systems.

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

The fixed-period inventory system requires more safety stock than a fixed-quantity system because:

In the production order quantity model,inventory does not arrive in a single moment but flows in at a steady rate,resulting in a larger production/order quantity than in an otherwise identical EOQ problem.

Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones?

Consider two inventory problems with identical demand,holding cost,and setup cost.In one,goods arrive instantly,but in the other goods arrive at a measurable rate.Which of these problems will have the larger optimal order quantity? Why?

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then ________ is variable and ________ is constant.

A product whose EOQ is 400 units experiences a 50% increase in demand.The new EOQ is:

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order.The revised EOQ is:

Describe the difference between a fixed-quantity and a fixed-period inventory system?

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Process Strategy

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

Lean Operations

Maintenance and Reliability

Sustainability in the Supply Chain

Statistical Process Control

Capacity and Constraint Management

Supply Chain Management Analytics

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters

Q is to systems as P is to systems.

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then is variable and is constant.