Question 1

The net quantity of an item available to satisfy future demand is referred to as

Accepted Answer

A)   reorder point (R) .
B)   scheduled receipts (SR) .
C)   inventory position (IP) .
D)   item fill rate (IFR) . C

Question 2

Sark Incorporated is out of stock for a key item,which has a backorder of 200 units.An open order of 750 units is scheduled for arrival on the following Monday.What is the current inventory position at Sark?

Accepted Answer

A)   less than or equal to 0 units
B)   greater than 0 but less than or equal to 500 units
C)   greater than 500 but less than or equal to 750 units
D)   greater than 750 units C

Question 3

The secondary levers for decoupling inventory emphasize

Accepted Answer

A)   finding more responsive suppliers and carriers for shipments between stocking locations.
B)   level customer demand by offering seasonal pricing plans.
C)   all aspects of uncertainty found in the demand, supply, delivery, and operations.
D)   better coordination and adjusting the output rate of individual operations. D

Question 4

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

Accepted Answer

A)   An increase in holding cost will increase the EOQ value.
B)   A decrease in demand will increase the EOQ value.
C)   A decrease in holding cost will increase the EOQ value.
D)   None of the above are true.

Question 5

Table 5.4
A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.4.What is the economic order quantity (EOQ)for this item?

Accepted Answer

A)   less than or equal to 175 units
B)   greater than 175 units but less than or equal to 200 units
C)   greater than 200 units but less than or equal to 225 units
D)   greater than 225 units

Question 6

The EOQ is the lot size that minimizes total annual inventory holding and ordering costs.

Accepted Answer

A) True 
 B)False

Question 7

Table 5.11
The following information has been collected on an independent demand item:
 Demand $= 30$ units per week (assume 52 weeks/ year)
Ordering and setup cost $= \$ 50$ per order
Holding cost $= \$ 8$ per unit per year
Lead time $= 1$ week
Standard deviation in weekly demand $= 8$ units
Cycle-service level $= 90 \%$ 
You will need to refer to a normal table to answer the question(s).
-Use the information from Table 5.11.Design a continuous review system (Q system)for this item,making Q equal to the EOQ.Assume that the demand during lead time is normally distributed.What are the desired values for Q and R?

Accepted Answer

A)   Q is between 138 and 142, and R is between 34 and 38.
B)   Q is between 121 and 125, and R is between 80 and 84.
C)   Q is between 138 and 142, and R is between 39 and 42.
D)   Q is between 121 and 125, and R is between 53 and 57.

Question 8

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

Accepted Answer

A)   The preferred proportion of annual demand instantaneously filled from stock
B)   The number of stockouts tolerated per year
C)   The preferred proportion of days in the year when an item is in stock
D)   The desired probability of not running out of stock in any one inventory cycle

Question 9

The ________ is the measurement of an item's ability to satisfy future demand.

Accepted Answer

The answer of The ________ is the measurement of an...

Question 10

ABC analysis is the process of dividing items into ________ according to their dollar usage.

Accepted Answer

The answer of ABC analysis is the process of dividing...

Question 11

When using ABC analysis,class C items should be reviewed frequently.

Accepted Answer

A) True 
 B)False

Question 12

Table 5.8
 Demand $= 52,000$ units/year
Standard deviation of weekly demand $= 110$ units
Ordering costs $= \$ 45 /$ order
Holding costs $= \$ 0.50 /$ unit/year
Cycle-service level $= 90 \%$
Lead time $= 2$ weeks
Number of weeks per year $= 52$ weeks 
You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.8.What is the EOQ for this item?

Accepted Answer

A)   greater than 0 but less than or equal to 1500 units
B)   greater than 1500 but less than or equal to 3000 units
C)   greater than 3000 but less than or equal to 4500 units
D)   greater than 4500 units

Question 13

Explain the impact the following three changes would have for EOQ level; (i)increase in the annual demand,(ii)increasing setup costs,and (iii)increases in the holding costs.

Accepted Answer

The answer of Explain the impact the following three changes...

Question 14

One component of the ordering cost of inventory is shrinkage.

Accepted Answer

A) True 
 B)False

Question 15

The desired probability of not running out of stock in any one order cycle is referred to as the

Accepted Answer

A)   cycle-service level.
B)   safety stock.
C)   reorder point.
D)   order fill rate.

Question 16

What is a base-stock system?

Accepted Answer

The answer of What is a base-stock system?...

Question 17

Table 5.8
 Demand $= 52,000$ units/year
Standard deviation of weekly demand $= 110$ units
Ordering costs $= \$ 45 /$ order
Holding costs $= \$ 0.50 /$ unit/year
Cycle-service level $= 90 \%$
Lead time $= 2$ weeks
Number of weeks per year $= 52$ weeks 
You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.8.If the firm changed to a continuous review system,what would be the reorder point?

Accepted Answer

A)   0 units
B)   greater than 0 but less than or equal to 1000 units
C)   greater than 1000 but less than or equal to 2000 units
D)   greater than 2000 units

Question 18

Table 5.2
Consider the following data for an independent demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop:
Weekly demand 	= 50 units
Ordering cost 	= $8/order
Holding cost 	= $4/order
Weeks in a year 	= 50
-Use the information in Table 5.2.If Crittenden uses the EOQ model,how frequently must she place orders for this item?

Accepted Answer

A)   every week
B)   every 2 weeks
C)   every 3 weeks
D)   every 4 weeks

Question 19

________ 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 20

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.

Exam 5: Inventory Management

The net quantity of an item available to satisfy future demand is referred to as

Sark Incorporated is out of stock for a key item,which has a backorder of 200 units.An open order of 750 units is scheduled for arrival on the following Monday.What is the current inventory position at Sark?

The secondary levers for decoupling inventory emphasize

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

The EOQ is the lot size that minimizes total annual inventory holding and ordering costs.

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

The ________ is the measurement of an item's ability to satisfy future demand.

ABC analysis is the process of dividing items into ________ according to their dollar usage.

When using ABC analysis,class C items should be reviewed frequently.

Explain the impact the following three changes would have for EOQ level; (i)increase in the annual demand,(ii)increasing setup costs,and (iii)increases in the holding costs.

One component of the ordering cost of inventory is shrinkage.

The desired probability of not running out of stock in any one order cycle is referred to as the

What is a base-stock system?

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

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