Question 1

The purpose of "cycle counting" is to:

Accepted Answer

A) count all the items in inventory 
B) count bicycles and motorcycles in inventory 
C) reduce discrepancies between inventory records and actual 
D) reduce theft 
E) count 10% of the items each month

Question 2

What is the economic order quantity for resin?

Accepted Answer

A) 50 kilograms 
B) 100 kilograms 
C) 250 kilograms 
D) 500 kilograms 
E) 1,000 kilograms

Question 3

If no variations in demand or lead time exist, the ROP will equal:

Accepted Answer

A) the EOQ 
B) expected usage during lead time 
C) safety stock 
D) the service level 
E) the EOQ plus safety stock

Question 4

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders.

Accepted Answer

A) True 
 B)False

Question 5

What is the economic order quantity for Stein beer?

Accepted Answer

A) 8 cases 
B) 11 cases 
C) 14 cases 
D) 20 cases 
E) 32 cases

Question 6

A shop owner uses a reorder point approach to restocking a certain raw material.Lead time is six days.Usage of the material during lead time is normally distributed with a mean of 42 pounds and a standard deviation of 4 pounds.When should the raw material be reordered if the acceptable risk of a stockout is 3%?

Accepted Answer

The answer of A shop owner uses a reorder point...

Question 7

If unsold copies can be returned for half credit and the owner stocks ten copies, what is the implied range of shortage cost?

Accepted Answer

The answer of If unsold copies can be returned for...

Question 8

The operator of a concession at a downtown location estimates that he will sell 400 bags of circus peanuts during a month.Carrying costs are 17 percent of unit price and ordering cost is $22.The price schedule for bags of peanuts is: 1 to 199, $1.00 each; 200 to 499, $.94 each; and 500 or more $.87 each.What order size would be most economical?

Accepted Answer

The answer of The operator of a concession at a...

Question 9

If she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level?

Accepted Answer

A) $3,000 
B) $6,000 
C) $12,500 
D) $300,000 
E) $600,000

Question 10

Which of the following is not true for Economic Production Quantity model?

Accepted Answer

A) Usage rate is constant. 
B) Production rate exceeds usage rate. 
C) Run size exceeds maximum inventory. 
D) There are no ordering or setup costs. 
E) Average inventory is one-half maximum inventory.

Question 11

With an A-B-C system, an item that had a high demand but a low annual dollar volume would probably be classified as:

Accepted Answer

A) A 
B) B 
C) C 
D) none of these

Question 12

A company can produce a part it uses in an assembly operation at the rate of 50 an hour.The company operates eight hours a day, 300 days a year.Daily usage of the part is 300 parts.The company uses the part every day.The run size is 6,000 parts.The annual holding cost is $2 per unit, and setup cost is $100.
(A) How many runs per year will there be?
(B) While production is occurring, how many parts per day are being added to inventory?
(C) Assuming that production begins when there are no parts on hand, what is the maximum number of parts in inventory?
(D) The machine is dedicated to this product.Every so often, preventive maintenance, which requires six working days, must be performed on it.Does this interrupt production cycles, or is there enough time between cycles to perform the maintenance? Explain.

Accepted Answer

The answer of A company can produce a part it...

Question 13

In the basic EOQ model, annual holding cost is one-half of the total annual cost for all items purchased.

Accepted Answer

A) True 
 B)False

Question 14

Discrete stocking levels are used when an organization doesn't want visibility of inventory levels.

Accepted Answer

A) True 
 B)False

Question 15

A dry cleaning firm uses an average of 20 gallons of cleaning fluid a day.Usage tends to be normally distributed with a standard deviation of two gallons per day.Lead time is four days, and the desired service level is 92 percent.What amount of safety stock is appropriate if a fixed order size of 600 gallons is used?

Accepted Answer

The answer of A dry cleaning firm uses an average...

Question 16

Cycle counting can be used in motorcycle inventory control.

Accepted Answer

A) True 
 B)False

Question 17

A manager reorders lubricant when the amount on-hand reaches 422 pounds.Average daily usage is 45 pounds, which is normally distributed with a standard deviation of three pounds per day.Lead time is nine days.What is the risk of a stockout?

Accepted Answer

The answer of A manager reorders lubricant when the amount...

Question 18

The objective of inventory management is to minimize the cost of holding inventory.

Accepted Answer

A) True 
 B)False

Question 19

A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine.The parts cost $400 each and have no salvage value.The manager has compiled a frequency distribution for the probable usage of spare parts, as shown.For what range of shortage costs would stocking one spare part constitute an optimal decision?
Number of

Accepted Answer

The answer of A manager intends to order a new...

Question 20

Dairy items, fresh fruit and newspapers are items that:

Accepted Answer

A) do not require safety stocks 
B) cannot be ordered in large quantities 
C) are subject to deterioration and spoilage 
D) require that prices be lowered every two days 
E) have minimal holding costs

Exam 13: Inventory Management

The purpose of "cycle counting" is to:

What is the economic order quantity for resin?

If no variations in demand or lead time exist, the ROP will equal:

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders.

What is the economic order quantity for Stein beer?

If unsold copies can be returned for half credit and the owner stocks ten copies, what is the implied range of shortage cost?

If she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level?

Which of the following is not true for Economic Production Quantity model?

With an A-B-C system, an item that had a high demand but a low annual dollar volume would probably be classified as:

In the basic EOQ model, annual holding cost is one-half of the total annual cost for all items purchased.

Discrete stocking levels are used when an organization doesn't want visibility of inventory levels.

Cycle counting can be used in motorcycle inventory control.

A manager reorders lubricant when the amount on-hand reaches 422 pounds.Average daily usage is 45 pounds, which is normally distributed with a standard deviation of three pounds per day.Lead time is nine days.What is the risk of a stockout?

The objective of inventory management is to minimize the cost of holding inventory.

Dairy items, fresh fruit and newspapers are items that: