Question 1

Cycle stock inventory is intended to deal with ________.

Accepted Answer

A) excess costs 
B) shortage costs 
C) stockouts 
D) expected demand 
E) quantity discounts 
A) excess costs 
B) shortage costs 
C) stockouts 
D) expected demand 
E) quantity discounts D

Question 2

What is the economic order quantity?

Accepted Answer

A) 600 bills 
B) 3,000 bills 
C) 949 bills 
D) 6,215 bills 
E) 12,500 bills 
A) 600 bills 
B) 3,000 bills 
C) 949 bills 
D) 6,215 bills 
E) 12,500 bills B

Question 3

Given the same demand, setup/ordering costs, and carrying costs, the EOQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed:

Accepted Answer

A) greater than the EOQ 
B) equal to the EOQ 
C) smaller than the EOQ 
D) greater than or equal to the EOQ 
E) smaller than or equal to the EOQ 
A) greater than the EOQ 
B) equal to the EOQ 
C) smaller than the EOQ 
D) greater than or equal to the EOQ 
E) smaller than or equal to the EOQ A

Question 4

The average inventory level is inversely related to order size.

Accepted Answer

A) True 
 B)False

Question 5

If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle?

Accepted Answer

A) 0 days 
B) 0.25 days 
C) 3 days 
D) 4 days 
E) 5 days 
A) 0 days 
B) 0.25 days 
C) 3 days 
D) 4 days 
E) 5 days

Question 6

Compared to the EOQ, the economic production quantity would be approximately:

Accepted Answer

A) the same 
B) 20 percent larger 
C) 40 percent larger 
D) 20 percent smaller 
E) 40 percent smaller 
A) the same 
B) 20 percent larger 
C) 40 percent larger 
D) 20 percent smaller 
E) 40 percent smaller

Question 7

What is the economic order quantity for this item?

Accepted Answer

The answer of What is the economic order quantity for...

Question 8

The calculation of safety stock requires knowledge of demand and lead time variability.

Accepted Answer

A) True 
 B)False

Question 9

Reorder point models are primarily used for dependent demand items.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following is implied by an "annual" service level of 95 percent?

Accepted Answer

A) Approximately 95 percent of demand during lead time will be satisfied. 
B) The probability is 95 percent that demand will exceed supply during lead time. 
C) The probability is 95 percent that demand will equal supply during lead time. 
D) The probability is 95 percent that demand will not exceed supply during lead time. 
E) None of the above. 
A) Approximately 95 percent of demand during lead time will be satisfied. 
B) The probability is 95 percent that demand will exceed supply during lead time. 
C) The probability is 95 percent that demand will equal supply during lead time. 
D) The probability is 95 percent that demand will not exceed supply during lead time. 
E) None of the above.

Question 11

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

Accepted Answer

A) have the lowest total cost 
B) be in a feasible range 
C) be to the left of the price break quantity for that price 
D) have the largest quantity compared to other EOQ's 
E) none of the above 
A) have the lowest total cost 
B) be in a feasible range 
C) be to the left of the price break quantity for that price 
D) have the largest quantity compared to other EOQ's 
E) none of the above

Question 12

ROP models assume that demand during lead time is composed of a series of dependent daily demands.

Accepted Answer

A) True 
 B)False

Question 13

If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?

Accepted Answer

A) 4 cases 
B) 12 cases 
C) 8 cases 
D) 20 cases 
E) 16 cases 
A) 4 cases 
B) 12 cases 
C) 8 cases 
D) 20 cases 
E) 16 cases

Question 14

Which item would be least likely to be ordered under a fixed order interval system?

Accepted Answer

A) textbooks at a college bookstore 
B) auto parts at an assembly plant 
C) cards at a gift shop 
D) canned peas at a supermarket 
E) none of these 
A) textbooks at a college bookstore 
B) auto parts at an assembly plant 
C) cards at a gift shop 
D) canned peas at a supermarket 
E) none of these

Question 15

Profit margins tend to be inversely related to inventory turns.

Accepted Answer

A) True 
 B)False

Question 16

The EOQ model is most relevant for which one of the following?

Accepted Answer

A) ordering items with dependent demand 
B) determination of safety stock 
C) ordering perishable items 
D) determining fixed interval order quantities 
E) determining fixed order quantities 
A) ordering items with dependent demand 
B) determination of safety stock 
C) ordering perishable items 
D) determining fixed interval order quantities 
E) determining fixed order quantities

Question 17

For the economic order quantity, what are average weekly carrying costs?

Accepted Answer

The answer of For the economic order quantity, what are...

Question 18

Annual ordering cost is inversely related to order size.

Accepted Answer

A) True 
 B)False

Question 19

A quantity discount will lower the reorder point.

Accepted Answer

A) True 
 B)False

Question 20

The need for safety stocks can be reduced by an operations strategy which:

Accepted Answer

A) increases lead time 
B) increases lead time variability 
C) increases lot sizes 
D) decreases ordering costs 
E) decreases lead time variability 
A) increases lead time 
B) increases lead time variability 
C) increases lot sizes 
D) decreases ordering costs 
E) decreases lead time variability

Exam 13: Inventory Management

Cycle stock inventory is intended to deal with ________.

What is the economic order quantity?

Given the same demand, setup/ordering costs, and carrying costs, the EOQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed:

The average inventory level is inversely related to order size.

If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle?

Compared to the EOQ, the economic production quantity would be approximately:

What is the economic order quantity for this item?

The calculation of safety stock requires knowledge of demand and lead time variability.

Reorder point models are primarily used for dependent demand items.

Which one of the following is implied by an "annual" service level of 95 percent?

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

ROP models assume that demand during lead time is composed of a series of dependent daily demands.

If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?

Which item would be least likely to be ordered under a fixed order interval system?

Profit margins tend to be inversely related to inventory turns.

The EOQ model is most relevant for which one of the following?

For the economic order quantity, what are average weekly carrying costs?

Annual ordering cost is inversely related to order size.

A quantity discount will lower the reorder point.

The need for safety stocks can be reduced by an operations strategy which:

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Extension 4: Reliability

Extension 5: Decision Theory

Extension 7: Learning Curves

Extension 8: The Transportation Model

Extension 10: Acceptance Sampling

Extension 14: Maintenance

Filters