Question 1

What are the secondary levers for pipeline inventory?

Accepted Answer

The secondary levers for pipeline invent

Question 2

Scenario 9.2
The Burdell Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes.One of these gear assemblies,the "Smooth Shifter",is used for the two most expensive of Burdell's four models,and has an estimated annual demand of 300 units.Burdell estimates the cost to place an order is $40,and the holding cost for each assembly is $60 per year.The company operates 250 days per year.
-Use the information in Scenario 9.2.What is the economic order quantity for the Smooth Shifter?

Accepted Answer

A) less than or equal to 40 units 
B) greater than 40 units but less than or equal to 80 units 
C) greater than 80 units but less than or equal to 120 units 
D) greater than 120 units 
A) less than or equal to 40 units 
B) greater than 40 units but less than or equal to 80 units 
C) greater than 80 units but less than or equal to 120 units 
D) greater than 120 units

Question 3

Although lower inventories and a just-in-time approach receive considerable attention in the business media,some organizations prefer high levels of inventory.Why would they want to hold a large inventory?

Accepted Answer

In the retail sector,some firms target a

Question 4

Use the following to answer the questions below.
Shipments of Product X from a plant to a wholesaler are made in lots of 600.The wholesaler's average demand for X is 100 units per week.Lead time from plant to wholesaler is 4 weeks.The wholesaler pays for the shipments when they leave the plant.
-Refer to the instruction above.If the plant reduces its lead time from 4 to 2 weeks and keeps its 600 unit lot size,what is the wholesaler's new total cycle plus pipeline inventories?

Accepted Answer

A) 300 units 
B) 500 units 
C) 700 units 
D) 200 units 
A) 300 units 
B) 500 units 
C) 700 units 
D) 200 units

Question 5

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 80 units
Open orders (scheduled receipts): 100 units
Backorders: 20 units
Reorder point: 150 units
Quantity per order: 50 units
Which of the following statements best describes Hess's situation regarding inventory replenishment?

Accepted Answer

A) No action is required,since Hess's inventory position is greater than the reorder point. 
B) Hess should order one lot of 50 units to cover its backorders. 
C) Because it is incurring backorders,Hess should increase its reorder point. 
D) Hess should place an order for 50 units,since their inventory position is less than the reorder point. 
A) No action is required,since Hess's inventory position is greater than the reorder point. 
B) Hess should order one lot of 50 units to cover its backorders. 
C) Because it is incurring backorders,Hess should increase its reorder point. 
D) Hess should place an order for 50 units,since their inventory position is less than the reorder point.

Question 6

________ consists of items such as components or assemblies needed for a final product in manufacturing.

Accepted Answer

Work-in-pr

Question 7

Which of the following is NOT a lever for reducing cycle inventories?

Accepted Answer

A) place purchased item orders at fixed intervals 
B) reduce lot sizes for items moving in the supply chain 
C) streamline methods for placing orders and making machine set ups 
D) increase repeatability to eliminate the need for changeovers 
A) place purchased item orders at fixed intervals 
B) reduce lot sizes for items moving in the supply chain 
C) streamline methods for placing orders and making machine set ups 
D) increase repeatability to eliminate the need for changeovers

Question 8

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q)is ordered.

Accepted Answer

The answer of The ________ is the predetermined minimum level...

Question 9

Which one of the following descriptions of a base-stock system is best?

Accepted Answer

A) It is particularly attractive when review and ordering costs are both significant. 
B) It can be seen as a way to minimize cycle inventory. 
C) Examples include gasoline storage tanks at a service station. 
D) An item's inventory is stored at two different locations or "bins." 
A) It is particularly attractive when review and ordering costs are both significant. 
B) It can be seen as a way to minimize cycle inventory. 
C) Examples include gasoline storage tanks at a service station. 
D) An item's inventory is stored at two different locations or "bins."

Question 10

Which one of the following statements represents an advantage of the P system over the Q system?

Accepted Answer

A) Less safety stock is carried to achieve the same service level. 
B) The replenishment intervals can be more easily individualized for items. 
C) Orders can be more easily combined to the same supplier. 
D) A P system is more suitable for quantity discounts and capacity limitations. 
A) Less safety stock is carried to achieve the same service level. 
B) The replenishment intervals can be more easily individualized for items. 
C) Orders can be more easily combined to the same supplier. 
D) A P system is more suitable for quantity discounts and capacity limitations.

Question 11

Scenario 9.3
Tom Bergman,owner and operator of the Earplug Superstore,is reviewing the costs associated with the store's best-selling hearing aid,the BZ15.The data available to Mr.Bergman concerning this device follow.
Demand = 25 units/week
Order cost = $3/order
Holding cos = $1.50/unit/year
The Earplug Superstore operates 52 weeks a year.
-Use the information in Scenario 9.3.If Tom orders such that his annual holding cost is twice what his annual ordering cost is,how many units at a time is he ordering?

Accepted Answer

A) less than or equal to 100 units 
B) greater than 100 but less than or equal to 105 units 
C) greater than 105 but less than or equal to 110 units 
D) greater than 110 units 
A) less than or equal to 100 units 
B) greater than 100 but less than or equal to 105 units 
C) greater than 105 but less than or equal to 110 units 
D) greater than 110 units

Question 12

Scenario 9.2
The Burdell Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes.One of these gear assemblies,the "Smooth Shifter",is used for the two most expensive of Burdell's four models,and has an estimated annual demand of 300 units.Burdell estimates the cost to place an order is $40,and the holding cost for each assembly is $60 per year.The company operates 250 days per year.
-Use the information in Scenario 9.2.What is the cycle length (time between orders)when orders are placed using the EOQ quantity?

Accepted Answer

A) less than or equal to 5 days 
B) greater than 5 days but less than or equal to 10 days 
C) greater than 10 days but less than or equal to 15 days 
D) greater than 15 days 
A) less than or equal to 5 days 
B) greater than 5 days but less than or equal to 10 days 
C) greater than 10 days but less than or equal to 15 days 
D) greater than 15 days

Question 13

Scenario 9.5
Cranium,Inc. ,purchases term papers from an overseas supplier under a continuous review system.The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day.It costs $60 to process each order and there is a five-day lead-time.The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level.Cranium operates 200 days per year.A normal distribution table is appended to this exam.
-Use the information in Scenario 9.5.What combination of changes in lead-time and service level would result in exactly the same level of safety stock as indicated in the table?

Accepted Answer

A) Lead-time drops to 41 days and service level increases to 99%. 
B) Lead-time increases to 18.52 days and service level drops to 92%. 
C) Lead-time increases to 20.54 days and service level drops to 90%. 
D) Lead-time drops to 3.5 days and service level increases to 99.54%. 
A) Lead-time drops to 41 days and service level increases to 99%. 
B) Lead-time increases to 18.52 days and service level drops to 92%. 
C) Lead-time increases to 20.54 days and service level drops to 90%. 
D) Lead-time drops to 3.5 days and service level increases to 99.54%.

Question 14

Scenario 9.11
The Hastings Company is a nation-wide wholesaler for small electronic devices.One of its most popular items is a calculator,the "Whizz-Bang 1100".Hastings's demand,lead time and cycle service requirements for the W-B 1100 are as follows:
Demand = 25,000 units/year
Number of weeks per year = 50 weeks
Standard deviation of weekly demand = 100 units
Average lead time = 6 weeks
Standard deviation of lead time: 2 weeks
Cycle-service level = 85%
Hastings uses a continuous review system to control inventory.
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.11.What safety stock should Hastings use for the Whizz-Bang 1100?

Accepted Answer

A) greater than 0 but less than or equal to 100 units 
B) greater than 100 units but less than or equal to 500 units 
C) greater than 500 units but less than or equal to 1,500 units 
D) greater than 1,500 units but less than or equal to 2,500 units 
E) greater than 2,500 units 
A) greater than 0 but less than or equal to 100 units 
B) greater than 100 units but less than or equal to 500 units 
C) greater than 500 units but less than or equal to 1,500 units 
D) greater than 1,500 units but less than or equal to 2,500 units 
E) greater than 2,500 units

Question 15

Apply your understanding of forecasting to the idea of a developing a reorder point for uncertain demand.What could be done to make a reorder point more accurate?

Accepted Answer

The reorder point is determined by the a

Question 16

Sensitivity analysis on the economic order quantity (EOQ)formula can help the operations manager answer several questions on how to manage inventories.Which one of the following questions is NOT answered by EOQ sensitivity analysis?

Accepted Answer

A) How critical are errors in estimating demand (
D) ,inventory holding cost (H),and setup cost (S)? 
B) What should happen to lot sizes if interest rates drop? 
C) What should happen to cycle inventory if the demand rate increases? 
D) What should happen to lot sizes if supply and lead-time uncertainty increase? 
A) How critical are errors in estimating demand (
D) ,inventory holding cost (H),and setup cost (S)? 
B) What should happen to lot sizes if interest rates drop? 
C) What should happen to cycle inventory if the demand rate increases? 
D) What should happen to lot sizes if supply and lead-time uncertainty increase?

Question 17

Scenario 9.2
The Burdell Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes.One of these gear assemblies,the "Smooth Shifter",is used for the two most expensive of Burdell's four models,and has an estimated annual demand of 300 units.Burdell estimates the cost to place an order is $40,and the holding cost for each assembly is $60 per year.The company operates 250 days per year.
-Use the information in Scenario 9.2.How many times per year must Burdell order the Smooth Shifter when orders are placed using the EOQ quantity?

Accepted Answer

A) less than or equal to 10 times per year 
B) more than 10 times but fewer than or equal to 20 times per year 
C) more than 20 times but fewer than or equal to 30 times per year 
D) more than 30 times per year 
A) less than or equal to 10 times per year 
B) more than 10 times but fewer than or equal to 20 times per year 
C) more than 20 times but fewer than or equal to 30 times per year 
D) more than 30 times per year

Question 18

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 9.7
You are the operations manager of a firm that uses the continuous-review inventory control system.Suppose the firm operates 52 weeks a year,365 days,and has the following characteristics for its primary item:
Demand = 25,000 units/year
Ordering cost = $30/order
Holding cost = $8/unit/year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.7.What is the reorder point for this item if they use a 95% service level?

Accepted Answer

A) 1,046 units 
B) 170 units 
C) 1,194 units 
D) 68 units 
A) 1,046 units 
B) 170 units 
C) 1,194 units 
D) 68 units

Question 20

Scenario 9.7
You are the operations manager of a firm that uses the continuous-review inventory control system.Suppose the firm operates 52 weeks a year,365 days,and has the following characteristics for its primary item:
Demand = 25,000 units/year
Ordering cost = $30/order
Holding cost = $8/unit/year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.7.How many orders per year does the company place if they order the economic order quantity each time?

Accepted Answer

A) less than or equal to 70 units 
B) greater than 70 but less than or equal to 80 units 
C) greater than 80 but less than or equal to 90 units 
D) greater than 90 units 
A) less than or equal to 70 units 
B) greater than 70 but less than or equal to 80 units 
C) greater than 80 but less than or equal to 90 units 
D) greater than 90 units

What are the secondary levers for pipeline inventory?

Although lower inventories and a just-in-time approach receive considerable attention in the business media,some organizations prefer high levels of inventory.Why would they want to hold a large inventory?

________ consists of items such as components or assemblies needed for a final product in manufacturing.

Which of the following is NOT a lever for reducing cycle inventories?

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q)is ordered.

Which one of the following descriptions of a base-stock system is best?

Which one of the following statements represents an advantage of the P system over the Q system?

Apply your understanding of forecasting to the idea of a developing a reorder point for uncertain demand.What could be done to make a reorder point more accurate?

Sensitivity analysis on the economic order quantity (EOQ)formula can help the operations manager answer several questions on how to manage inventories.Which one of the following questions is NOT answered by EOQ sensitivity analysis?

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

Using Operations to Compete

Project Management

Process Strategy

Process Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Supply Chain Design

Supply Chain Location Decisions

Supply Chain Integration

Supply Chain Sustainability and Humanitarian Logistics

Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Waiting Line

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Filters

Exam 9: Supply Chain Inventory Management

What are the secondary levers for pipeline inventory?

Although lower inventories and a just-in-time approach receive considerable attention in the business media,some organizations prefer high levels of inventory.Why would they want to hold a large inventory?

________ consists of items such as components or assemblies needed for a final product in manufacturing.

Which of the following is NOT a lever for reducing cycle inventories?

The ________ is the predetermined minimum level that an inventory position must reach before a fixed quantity (Q)is ordered.

Which one of the following descriptions of a base-stock system is best?

Which one of the following statements represents an advantage of the P system over the Q system?

Apply your understanding of forecasting to the idea of a developing a reorder point for uncertain demand.What could be done to make a reorder point more accurate?

Sensitivity analysis on the economic order quantity (EOQ)formula can help the operations manager answer several questions on how to manage inventories.Which one of the following questions is NOT answered by EOQ sensitivity analysis?

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

Using Operations to Compete

Project Management

Process Strategy

Process Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Supply Chain Design

Supply Chain Location Decisions

Supply Chain Integration

Supply Chain Sustainability and Humanitarian Logistics

Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Waiting Line

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Filters