Question 1

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

Accepted Answer

A)  C 
B)  TC 
C)  H 
D)  Q 
E)  S

Question 2

When developing inventory cost models,which of the following are not included as costs to place an order?

Accepted Answer

A)  Phone calls 
B)  Taxes 
C)  Clerical 
D)  Calculating quantity to order 
E)  Postage

Question 3

In making any decision that affects inventory size,which of the following costs do not need to be considered?

Accepted Answer

A)  Holding costs 
B)  Setup costs 
C)  Ordering costs 
D)  Fixed costs 
E)  Shortage costs

Question 4

The "sawtooth effect," named after turn-around artist Al "chainsaw" Dunlap,is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Accepted Answer

A)  A items get 15%,B items get 35%,and C items get 50% 
B)  A items get 15%,B items get 45%,and C items get 40% 
C)  A items get 25%,B items get 35%,and C items get 40% 
D)  A items get 25%,B items get 15%,and C items get 60% 
E)  A items get 20%,B items get 30%,and C items get 50%

Question 6

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  50 
B)  100 
C)  400 
D)  1,000 
E)  1,600

Question 7

Savings from reduced inventory results in increased profit.

Accepted Answer

A) True 
 B)False

Question 8

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

Accepted Answer

A) True 
 B)False

Question 9

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem),and the profit resulting from the last unit being sold (Cu)is $120 and the loss resulting from that unit if it is not sold (Co)is $360,which of the following is the probability of the last unit being sold?

Accepted Answer

A)  Greater than 0.90 
B)  Greater than 0.85 
C)  Greater than 0.75 
D)  Greater than 0.25 
E)  None of the above

Question 10

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120,124,and 125,which of the following is the standard deviation of usage during lead time?

Accepted Answer

A)  About 2.16 
B)  About 3.06 
C)  About 4.66 
D)  About 5.34 
E)  About 9.30

Question 11

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

Accepted Answer

A) True 
 B)False

Question 12

Price-break models deal with the fact that the selling price of an item varies with the order size.

Accepted Answer

A) True 
 B)False

Question 13

If annual demand is 8,000 units,the ordering cost is $20 per order and the holding cost is $12.50 per unit per year,what is the optimal order quantity using the fixed-order quantity inventory model? _____________________________________

Accepted Answer

The answer of If annual demand is 8,000 units,the ordering...

Question 14

A company has recorded the last six days of daily demand on a single product they sell.Those values are 37,115,93,112,73,and 110.The time from when an order is placed to when it arrives at the company from its vendor is 3 days.Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed,which of the following is the reorder point (R)?

Accepted Answer

A)  540 
B)  270 
C)  115 
D)  90 
E)  60

Question 15

If it takes a supplier 10 days to deliver an order once it has been placed and the standard deviation of daily demand is 14,what is the standard deviation of usage during lead time? _________________________________________

Accepted Answer

The answer of If it takes a supplier 10 days...

Question 16

Which of the following is usually included as an inventory holding cost?

Accepted Answer

A)  Order placing 
B)  Breakage 
C)  Typing up an order 
D)  Quantity discounts 
E)  Annualized cost of materials

Question 17

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem),and the profit resulting from the last unit being sold (Cu)is $0.90 and the loss resulting from that unit if it is not sold (Co)is $0.50,which of the following is the probability of the last unit being sold?

Accepted Answer

A)  Greater than 0.357 
B)  Greater than 0.400 
C)  Greater than 0.556 
D)  Greater than 0.678 
E)  None of the above

Question 18

In inventory models,high holding costs tend to favor low inventory levels and frequent replenishment.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Accepted Answer

A)  Ordering or setup costs are constant 
B)  Inventory holding cost is based on average inventory 
C)  Diminishing returns to scale of holding inventory 
D)  Lead time is constant 
E)  Demand for the product is uniform throughout the period

Question 20

Using the fixed-order quantity model,which of the following is the total ordering cost of inventory given an annual demand of 36,000 units,a cost per order of $80 and a holding cost per unit per year of $4?

Accepted Answer

A)  $849 
B)  $1,200 
C)  $1,889 
D)  $2,267 
E)  $2,400

Exam 11: Inventory Management

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?

When developing inventory cost models,which of the following are not included as costs to place an order?

In making any decision that affects inventory size,which of the following costs do not need to be considered?

The "sawtooth effect," named after turn-around artist Al "chainsaw" Dunlap,is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

Savings from reduced inventory results in increased profit.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120,124,and 125,which of the following is the standard deviation of usage during lead time?

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

Price-break models deal with the fact that the selling price of an item varies with the order size.

If annual demand is 8,000 units,the ordering cost is $20 per order and the holding cost is $12.50 per unit per year,what is the optimal order quantity using the fixed-order quantity inventory model? _____________________________________

If it takes a supplier 10 days to deliver an order once it has been placed and the standard deviation of daily demand is 14,what is the standard deviation of usage during lead time? _________________________________________

Which of the following is usually included as an inventory holding cost?

In inventory models,high holding costs tend to favor low inventory levels and frequent replenishment.

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Using the fixed-order quantity model,which of the following is the total ordering cost of inventory given an annual demand of 36,000 units,a cost per order of $80 and a holding cost per unit per year of $4?