Question 1

Independent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other items held in stock.

Accepted Answer

A) True 
 B)False

Question 2

Inventory ________ cost is the variable cost of keeping items on hand,such as storage and handling,taxes,insurance,and shrinkage.

Accepted Answer

The answer of Inventory ________ cost is the variable cost...

Question 3

Scenario 9.12
Demand = 100,000 units/year
Number of days per year = 250 weeks
Standard deviation of weekly demand = 50 units
Average lead time = 5 days
Standard deviation of lead time: 2 days
Cycle-service level = 99%
A continuous review system is used to control inventory.
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.12.If the firm decides to reduce its cycle-service level to 95%,what is the new reorder point if all other parameters remain the same for this product?

Accepted Answer

A) greater than 4,500 units 
B) greater than 3,500 units but less than or equal to 4,500 units 
C) greater than 2,500 units but less than or equal to 3,500 units 
D) greater than 1,500 units but less than or equal to 2,500 units 
E) greater than 0 but less than or equal to 1,500 units 
A) greater than 4,500 units 
B) greater than 3,500 units but less than or equal to 4,500 units 
C) greater than 2,500 units but less than or equal to 3,500 units 
D) greater than 1,500 units but less than or equal to 2,500 units 
E) greater than 0 but less than or equal to 1,500 units

Question 4

When looking at inventory management,the term "lot size" refers to the physical dimensions of the area where the inventory is stored.

Accepted Answer

A) True 
 B)False

Question 5

A(n)________ is a system that allows employees to place orders when inventory visibly reaches a certain marker.

Accepted Answer

visual sys

Question 6

Scenario 9.6
Consider the following data for an independent-demand item maintained by Angie Bonpensiero,the proprietor of a local auto repair shop:
Weekly demand = 50 units
Ordering cost = $8/order
Holding cost = $4/unit/year
Weeks in a year = 50
-Use the information in Scenario 9.6.Due to new ordering procedures initiated by Bonpensiero,the ordering cost is drops to $4 per order.At the same time,the weekly demand increases to 64 units per week due to an increase in business.What effect do these changes have on the EOQ quantity for this item?

Accepted Answer

A) The EOQ quantity remains unchanged. 
B) The EOQ quantity increases by 20%. 
C) The EOQ quantity decreases by 20%. 
D) Sufficient information is not available to answering this question. 
A) The EOQ quantity remains unchanged. 
B) The EOQ quantity increases by 20%. 
C) The EOQ quantity decreases by 20%. 
D) Sufficient information is not available to answering this question.

Question 7

Scenario 9.3
The Talbot Company uses electrical assemblies to produce an array of small appliances.One of its high cost / high volume assemblies,the XO-01,has an estimated annual demand of 8,000 units.Talbot estimates the cost to place an order is $50,and the holding cost for each assembly is $20 per year.The company operates 250 days per year.
-Use the information in Scenario 9.3.How many times per year must Talbot order the XO-01 when orders are placed using the EOQ quantity?

Accepted Answer

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

Question 8

What is ABC analysis and how does it work?

Accepted Answer

ABC analysis is a process of dividing SK

Question 9

In an EOQ model,as the ordering cost for an item decreases,the EOQ for the item ________.

Accepted Answer

The answer of In an EOQ model,as the ordering cost...

Question 10

What are the secondary levers for safety stock inventory?

Accepted Answer

The secondary levers for safety stock in

Question 11

Scenario 9.1
Shipments of Product A from a distribution center to a retailer are made in lots of 350.The retailer's average demand for Product A is 75 units per week.The lead time from distributor to retailer is 3 weeks.The retailer pays for the shipments when they leave the distributor.The distributor has agreed to reduce the lead time to 2 weeks if the retailer will purchase quantities of 400 per shipment instead of 350 units per shipment.
-Refer to Scenario 9.1.The net impact on the retailer will be:

Accepted Answer

A) no net change in average cycle and pipeline inventories. 
B) a net average increase in cycle and pipeline inventories of 50 units. 
C) a net average decrease in cycle and pipeline inventories of 75 units. 
D) a net average decrease in cycle and pipeline inventories of 50 units. 
A) no net change in average cycle and pipeline inventories. 
B) a net average increase in cycle and pipeline inventories of 50 units. 
C) a net average decrease in cycle and pipeline inventories of 75 units. 
D) a net average decrease in cycle and pipeline inventories of 50 units.

Question 12

Which one of the following statements regarding the economic order quantity (EOQ)is TRUE?

Accepted Answer

A) The EOQ model combines several different item orders to the same supplier. 
B) If an order quantity is larger than the EOQ,the annual holding cost for cycle inventory exceeds the annual ordering cost. 
C) The EOQ model assumes a variable demand pattern. 
D) When the interest rate drops,the inventory holding cost decreases and the EOQ decreases. 
A) The EOQ model combines several different item orders to the same supplier. 
B) If an order quantity is larger than the EOQ,the annual holding cost for cycle inventory exceeds the annual ordering cost. 
C) The EOQ model assumes a variable demand pattern. 
D) When the interest rate drops,the inventory holding cost decreases and the EOQ decreases.

Question 13

Considering the EOQ model,smaller lots are justified when holding costs are decreased.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Items,such as components or assemblies,needed to manufacture a final product are called:

Accepted Answer

A) quarantined materials. 
B) work-in-process. 
C) raw materials. 
D) finished goods. 
A) quarantined materials. 
B) work-in-process. 
C) raw materials. 
D) finished goods.

Question 16

A(n)________ is an order that cannot be satisfied,resulting in the loss of a sale.

Accepted Answer

The answer of A(n)________ is an order that cannot be...

Question 17

The Hastings Company is a nation-wide wholesaler for small electronic devices.One of its most popular items is a new GPS unit called the WAMI-1000.Hastings has gathered the following information,and has asked you to develop a continuous review inventory control system for this item:
Order quantity for each order placed with manufacturer = 10,000 units
Average demand = 1,000 units/week
Standard deviation of weekly demand = 200 units
Average lead time = 5 weeks
Standard deviation of lead time: 1.5 weeks
Cycle-service level = 90% (z for 90% = 1.28)
a.What is the standard deviation of demand during lead time?
b.What is the safety stock level that should be carried for the WAMI-1000?
c.What is the reorder point for the WAMI-1000?
d.Summarize the actions Hastings should take using your new inventory system.
e.If Hastings decides to increase its cycle-service level from 90% to 95% (z for 95% = 1.65),how does this change the actions that should be taken?

Accepted Answer

a.σdLT = @#IMG-DLM& = @#IMG-DLM& = @#IMG-DLM& = 1,565.25 →1,565 units

Question 18

Which of the following does not increase repeatability?

Accepted Answer

A) parts standardization 
B) customization 
C) group technology 
D) flexible automation 
A) parts standardization 
B) customization 
C) group technology 
D) flexible automation

Question 19

A store has collected the following information on one of its products:
Demand = 4,500 units/year
Standard deviation of weekly demand = 12 units
Ordering costs = $40/order
Holding costs = $3/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead-time = 2 weeks
Number of weeks per year = 52 weeks
a.If a firm uses the continuous review system to control the inventory,what would be the order quantity and reorder point?
b.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 300 units.There were no scheduled receipts or backorders at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews. )

Accepted Answer

The answer of A store has collected the following information...

Question 20

A stock-keeping unit (SKU)is a specially designed container for holding a specific amount of an inventory item somewhere along the supply chain.

Accepted Answer

A) True 
 B)False

Independent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other items held in stock.

Inventory ________ cost is the variable cost of keeping items on hand,such as storage and handling,taxes,insurance,and shrinkage.

When looking at inventory management,the term "lot size" refers to the physical dimensions of the area where the inventory is stored.

A(n)________ is a system that allows employees to place orders when inventory visibly reaches a certain marker.

What is ABC analysis and how does it work?

In an EOQ model,as the ordering cost for an item decreases,the EOQ for the item ________.

What are the secondary levers for safety stock inventory?

Which one of the following statements regarding the economic order quantity (EOQ)is TRUE?

Considering the EOQ model,smaller lots are justified when holding costs are decreased.

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?

Items,such as components or assemblies,needed to manufacture a final product are called:

A(n)________ is an order that cannot be satisfied,resulting in the loss of a sale.

Which of the following does not increase repeatability?

A stock-keeping unit (SKU)is a specially designed container for holding a specific amount of an inventory item somewhere along the supply chain.

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Decision Making

Waiting Lines

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Layout

Filters

Exam 9: Inventory Management

Independent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other items held in stock.

Inventory ________ cost is the variable cost of keeping items on hand,such as storage and handling,taxes,insurance,and shrinkage.

When looking at inventory management,the term "lot size" refers to the physical dimensions of the area where the inventory is stored.

A(n)________ is a system that allows employees to place orders when inventory visibly reaches a certain marker.

What is ABC analysis and how does it work?

In an EOQ model,as the ordering cost for an item decreases,the EOQ for the item ________.

What are the secondary levers for safety stock inventory?

Which one of the following statements regarding the economic order quantity (EOQ)is TRUE?

Considering the EOQ model,smaller lots are justified when holding costs are decreased.

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?

Items,such as components or assemblies,needed to manufacture a final product are called:

A(n)________ is an order that cannot be satisfied,resulting in the loss of a sale.

Which of the following does not increase repeatability?

A stock-keeping unit (SKU)is a specially designed container for holding a specific amount of an inventory item somewhere along the supply chain.

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Decision Making

Waiting Lines

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Layout

Filters