Question 1

Items sold to a firm's customers 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 2

Scenario 9.4
The Mwongola 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 9.4.How many times per year must Mwongola 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 3

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 4

The primary lever to reduce anticipation inventory is to place orders closer to the time when they must be received.

Accepted Answer

A) True 
 B)False

Question 5

A neighborhood sportswear store sells a pair of Victoria sneakers for $40.Due to the recent fitness craze,these shoes are in high demand: 50 pairs of shoes are sold per week.The ordering cost is $20 per order,and the annual holding cost is 20% of the selling price.If the store operates 52 weeks a year,what can you say about the current lot size of 235?

Accepted Answer

A) too large 
B) too small 
C) just right 
D) cannot tell from the information given 
A) too large 
B) too small 
C) just right 
D) cannot tell from the information given

Question 6

A company operating under an EOQ policy enjoys rising annual demand for their products for three consecutive years.During this time their holding cost and ordering cost remain constant.Which statement is BEST?

Accepted Answer

A) Their order quantity will fall and so will the time between orders. 
B) Their order quantity will fall but the time between orders will rise. 
C) Their order quantity will rise but the time between orders will fall. 
D) Their order quantity will rise and so will the time between orders. 
A) Their order quantity will fall and so will the time between orders. 
B) Their order quantity will fall but the time between orders will rise. 
C) Their order quantity will rise but the time between orders will fall. 
D) Their order quantity will rise and so will the time between orders.

Question 7

A store has collected the following information on one of its products:
Demand = 10,000 units/year
Standard deviation of weekly demand = 25 units
Ordering costs = $30/order
Holding costs = $4/unit/year
Cycle-service level = 95% (z for 95% = 1.65)
Lead-time = 2 weeks
Number of weeks per year = 50 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 200 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

a.
Qopt = @#IMG-DLM& = @#IMG-DLM& = 387.30 → 387 units
R = @#IMG-DLM&

Question 8

Which one of the following statements is BEST?

Accepted Answer

A) The level of safety stock maintained decreases when the desired cycle-service level increases. 
B) The level of safety stock maintained decreases when the standard deviation of demand during lead-time increases. 
C) When no safety stock is maintained,stockouts will occur during approximately 50% of the cycles. 
D) The level of safety stock maintained is greater if mean absolute deviation (MA
D) is used rather than standard deviation in estimating forecast errors. 
A) The level of safety stock maintained decreases when the desired cycle-service level increases. 
B) The level of safety stock maintained decreases when the standard deviation of demand during lead-time increases. 
C) When no safety stock is maintained,stockouts will occur during approximately 50% of the cycles. 
D) The level of safety stock maintained is greater if mean absolute deviation (MA
D) is used rather than standard deviation in estimating forecast errors.

Question 9

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

Accepted Answer

A) They will be reduced by a factor of 1.41. 
B) They will not change. 
C) They will be reduced by a factor of 2.00. 
D) They will be increased by a factor of 1.41. 
A) They will be reduced by a factor of 1.41. 
B) They will not change. 
C) They will be reduced by a factor of 2.00. 
D) They will be increased by a factor of 1.41.

Question 10

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.What is the cycle length (time between orders)when orders are placed using the EOQ quantity?

Accepted Answer

A) less than 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 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 11

A Theory of Constraints (TOC)advocate visits your factory and seems bemused by your use of EOQ to set your batch sizes.You launch into a brilliant defense of the EOQ.The TOC advocate grabs a piece of chalk and proceeds to sketch two sets of inventory cost curves on your pristine shop floor.What will his two different sets of cost curves look like and why?

Accepted Answer

One possible problem with your use of EO

Question 12

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

Accepted Answer

The answer of ________ is the opportunity cost of investing...

Question 13

________ inventory is the inventory moving from point to point in the materials flow system.

Accepted Answer

The answer of ________ inventory is the inventory moving from...

Question 14

A continuous review system is sometimes called a fixed interval reorder system.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 9.4
The Mwongola 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 9.4.What is the annual inventory holding cost if Mwongloa orders using the EOQ quantity?

Accepted Answer

A) less than or equal to $300 
B) greater than $300 but less than or equal to $500 
C) greater than $500 but less than or equal to $700 
D) greater than $700 
A) less than or equal to $300 
B) greater than $300 but less than or equal to $500 
C) greater than $500 but less than or equal to $700 
D) greater than $700

Question 16

Which of the following does NOT generate pressure to increase inventories?

Accepted Answer

A) transportation costs 
B) backorders and stockouts 
C) inventory shrinkage costs 
D) quantity discounts 
A) transportation costs 
B) backorders and stockouts 
C) inventory shrinkage costs 
D) quantity discounts

Question 17

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

Accepted Answer

A) True 
 B)False

Question 18

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.What reorder point should the firm use 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 19

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 20

As the annual demand increases,the EOQ also increases.

Accepted Answer

A) True 
 B)False

Items sold to a firm's customers are called:

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

The primary lever to reduce anticipation inventory is to place orders closer to the time when they must be received.

A company operating under an EOQ policy enjoys rising annual demand for their products for three consecutive years.During this time their holding cost and ordering cost remain constant.Which statement is BEST?

Which one of the following statements is BEST?

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

________ inventory is the inventory moving from point to point in the materials flow system.

A continuous review system is sometimes called a fixed interval reorder system.

Which of the following does NOT generate pressure to increase inventories?

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

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

As the annual demand increases,the EOQ also increases.

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

Items sold to a firm's customers are called:

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

The primary lever to reduce anticipation inventory is to place orders closer to the time when they must be received.

A company operating under an EOQ policy enjoys rising annual demand for their products for three consecutive years.During this time their holding cost and ordering cost remain constant.Which statement is BEST?

Which one of the following statements is BEST?

The Lemma Company manufactures and sells 10 products.Ways have been found to cut both the setup and inventory holding costs in half.What effect will this have on the economic order quantities of the 10 products?

________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.

________ inventory is the inventory moving from point to point in the materials flow system.

A continuous review system is sometimes called a fixed interval reorder system.

Which of the following does NOT generate pressure to increase inventories?

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

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

As the annual demand increases,the EOQ also increases.

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