Question 1

Consider the material tree structure for material A.Assume 10 units are needed.  (a)How many units of B are needed?
(b)How many units of C are needed?
(c)How many units of D are needed?
(d)How many units of E are needed?
(e)How many units of F are needed?

Accepted Answer

The answer of Consider the material tree structure for material...

Question 2

Judith Thompson is the manager of the student center cafeteria.She is introducing pizza as a menu item.The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria.Judith anticipates a weekly demand of 10 pizzas.The cafeteria is open 45 weeks a year, 5 days a week.The ordering cost is $15 and the holding cost is $0.40 per pizza per year.What is the optimal number of pizzas Judith should order?

Accepted Answer

A) 184 pizzas 
B) 9 pizzas 
C) 5 pizzas 
D) 28 pizzas

Question 3

For the basic EOQ model, which of the following relationships is not true?

Accepted Answer

A) The optimal number of orders per year equals annual demand divided by the EOQ. 
B) The reorder point equals daily demand multiplied by the lead-time in days, excluding safety stock. 
C) Average inventory level equals one-half the order size. 
D) The average dollar level of inventory equals unit price multiplied by order quantity.

Question 4

The campus bookstore knows from the past several semesters that a certain elementary statistics book has a demand that is approximated by a normal distribution with a mean of 250 and a standard deviation of 40.They buy these books for $105 each and sell them to unsuspecting undergraduates at $222 each.All demand for this book is realized by the middle of the semester, at which point the bookstore bundles them up and sells them to a vendor in another country for $40 each.How many elementary statistics books should the campus bookstore stock for sale to students?

Accepted Answer

A) 210 
B) 224 
C) 250 
D) 264

Question 5

Kanban is a Japanese word that literally means box.

Accepted Answer

A) True 
 B)False

Question 6

ABC analysis places inventory into 26 categories for computer analysis.

Accepted Answer

A) True 
 B)False

Question 7

Fresh First grocery store faces demand for freshly squeezed orange juice.The daily demand for freshly squeezed pomegranate juice ranges from 0 to 5 gallons.The grocery store offers the juice in a special 1 gallon bottle that will be discarded after a day.Each gallon costs $2 to make and is sold for $5.The daily demand for pomegranate juice varies according to the following distribution:
  How many gallons of juice should the store make each day?

Accepted Answer

The answer of Fresh First grocery store faces demand for...

Question 8

Which of these statements about EOQ is best?

Accepted Answer

A) Under the assumptions made to develop the EOQ model, average inventory is one-half of the maximum inventory. 
B) The EOQ model is very sensitive to minor violations of the basic assumptions. 
C) The economic order quantity helps one estimate the cost of holding inventory. 
D) An increase in holding cost will increase the economic order quantity, holding all other factors constant.

Question 9

The production run model is useful when a firm purchases inventory that is delivered over a period of time.

Accepted Answer

A) True 
 B)False

Question 10

Bret's bakery must decide how many loaves of fresh bread to produce in a single day.Daily demand for fresh bread is normally distributed with a mean of 70 loaves and standard deviation of 18.If the marginal loss is $2 and the marginal profit is $1, how much bread should Bret's bakery produce in a single day?

Accepted Answer

A) 88 
B) 52 
C) 63 
D) 78

Question 11

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.The purchase cost is $40 per unit.There are 250 working days per year.Currently, the company is ordering 500 units each time an order is placed.Assuming the company uses a safety stock of 20 units resulting in a reorder point of 60 units, what is the expected lead-time for delivery?

Accepted Answer

A) 4 days 
B) 5 days 
C) 6 days 
D) 7 days

Question 12

Mark Achin sells 3,600 electric motors each year.The cost of these is $200 each, and demand is constant throughout the year.The cost of placing an order is $40, while the holding cost is $20 per unit per year.There are 360 working days per year and the lead-time is 5 days.What is his economic order quantity in units?

Accepted Answer

A) 100 
B) 200 
C) 60 
D) 120

Question 13

Judith Thompson, the manager of the student center cafeteria, has added pizza to the menu.The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria.Judith anticipates a weekly demand of 10 pizzas.The cafeteria is open 45 weeks a year, 5 days a week.The ordering cost is $15 and the holding cost is $0.40 per pizza per year.The pizza vendor has a 4-day lead-time and Judith wants to maintain 1 pizza for safety stock.What is the optimal reorder point?

Accepted Answer

A) 10 
B) 8 
C) 4 
D) 9

Question 14

The annual demand for a product is 1,000 units.The company orders 200 units each time an order is placed.The lead-time is 6 days.There are 250 working days per year.If the reorder point is 50, what safety stock are they using?

Accepted Answer

A) 22 
B) 4 
C) 26 
D) 28

Question 15

R.C.Barker makes purchasing decisions for his company.One product that he buys costs $50 per unit when the order quantity is less than 500.When the quantity ordered is 500 or more, the price per unit drops to $48.The ordering cost is $30 per order and the annual demand is 7,500 units.The holding cost is 10 percent of the purchase cost.If R.C.wishes to minimize his total annual inventory costs, he must evaluate the total cost for two possible order quantities.What are these two possible quantities? (Round answer to nearest unit.)

Accepted Answer

A) 300 and 306 
B) 300 and 500 
C) 306 and 50 
D) 200 and 306

Question 16

The annual demand for a product is 1,000 units.The company orders 200 units each time an order is placed.The lead-time is 6 days, and the company has determined that 20 units should be held as a safety stock.There are 250 working days per year.What is the reorder point?

Accepted Answer

A) 20 
B) 24 
C) 44 
D) 120

Question 17

Candy Incorporated stocks bubble gum game cards, an item that has a normally distributed demand during the reorder period with a mean of 12 dozen boxes and a standard deviation of two dozen boxes.If it is desirable to experience a stockout only 10 percent of the time, what is the appropriate safety stock?

Accepted Answer

The answer of Candy Incorporated stocks bubble gum game cards,...

Question 18

Sensitivity analysis of EOQ refers to

Accepted Answer

A) the attitude of top management toward the use of the EOQ model. 
B) analysis of how much the EOQ will change if different input values are used. 
C) an assessment of the impact of obsolescence upon the EOQ. 
D) a study of the impact of storing incompatible products in the same warehouse.

Question 19

Spoilage, theft and obsolescence are all considered to be carrying cost factors.

Accepted Answer

A) True 
 B)False

Question 20

One of the assumptions of the basic EOQ model is that the receipt of inventory is instantaneous.

Accepted Answer

A) True 
 B)False

Exam 6: Inventory Control Models

Consider the material tree structure for material A.Assume 10 units are needed. (a)How many units of B are needed? (b)How many units of C are needed? (c)How many units of D are needed? (d)How many units of E are needed? (e)How many units of F are needed?

For the basic EOQ model, which of the following relationships is not true?

Kanban is a Japanese word that literally means box.

ABC analysis places inventory into 26 categories for computer analysis.

Which of these statements about EOQ is best?

The production run model is useful when a firm purchases inventory that is delivered over a period of time.

The annual demand for a product is 1,000 units.The company orders 200 units each time an order is placed.The lead-time is 6 days.There are 250 working days per year.If the reorder point is 50, what safety stock are they using?

The annual demand for a product is 1,000 units.The company orders 200 units each time an order is placed.The lead-time is 6 days, and the company has determined that 20 units should be held as a safety stock.There are 250 working days per year.What is the reorder point?

Sensitivity analysis of EOQ refers to

Spoilage, theft and obsolescence are all considered to be carrying cost factors.

One of the assumptions of the basic EOQ model is that the receipt of inventory is instantaneous.