Question 1

Which of the following is not true for the EOQ model with gradual replenishment?

Accepted Answer

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

Question 2

When developing an inventory policy,the only relevant costs are the variable costs.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is not included in setup costs?

Accepted Answer

A) Typing up invoices. 
B) Moving delivered goods to temporary storage. 
C) Inspecting incoming goods for quality. 
D) Taking an inventory to determine how much is needed. 
E) Temporary storage of delivered goods. 
A) Typing up invoices. 
B) Moving delivered goods to temporary storage. 
C) Inspecting incoming goods for quality. 
D) Taking an inventory to determine how much is needed. 
E) Temporary storage of delivered goods. E

Question 4

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages.

Accepted Answer

A) True 
 B)False

Question 5

In the EOQ model with quantity discounts,if holding costs are given as a percentage of unit price,a graph of the total cost curves will have the same EOQ for each curve.

Accepted Answer

A) True 
 B)False

Question 6

The JIT philosophy is one of avoiding waste wherever it might occur in the production process.
Multiple Choice Questions

Accepted Answer

A) True 
 B)False

Question 7

Subassemblies are an example of independent demand items.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following are part of a MRP system?

Accepted Answer

A) Production schedule. 
B) Bill of materials. 
C) Inventory status records. 
D) All of the above. 
E) None of the above. 
A) Production schedule. 
B) Bill of materials. 
C) Inventory status records. 
D) All of the above. 
E) None of the above.

Question 9

Setup costs can occur through purchasing or manufacturing products.

Accepted Answer

A) True 
 B)False

Question 10

EOQ inventory models are basically concerned with the timing of orders.

Accepted Answer

A) True 
 B)False

Question 11

Inspection of goods for quality and quantity upon arrival is part of setup costs.

Accepted Answer

A) True 
 B)False

Question 12

The EOQ approach minimizes annual setup costs.

Accepted Answer

A) True 
 B)False

Question 13

If she was 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 day. 
D) 4 days. 
E) 5 days. 
A) 0 days. 
B) 0.25 days. 
C) 3 day. 
D) 4 days. 
E) 5 days.

Question 14

MRP is a system for determining optimal order quantities for dependent-demand products.

Accepted Answer

A) True 
 B)False

Question 15

In the basic EOQ model,annual setup cost is equal to:

Accepted Answer

A) the EOQ multiplied by setup cost. 
B) the EOQ divided by setup cost. 
C) setup cost multiplied by the ratio of the annual demand to the EOQ. 
D) setup cost multiplied by the ratio of the EOQ to annual demand. 
E) setup cost multiplied by annual demand. 
A) the EOQ multiplied by setup cost. 
B) the EOQ divided by setup cost. 
C) setup cost multiplied by the ratio of the annual demand to the EOQ. 
D) setup cost multiplied by the ratio of the EOQ to annual demand. 
E) setup cost multiplied by annual demand.

Question 16

Which of the following would generally have independent demand?

Accepted Answer

A) Subassemblies. 
B) Component parts. 
C) Finished goods. 
D) All of these. 
E) None of these. 
A) Subassemblies. 
B) Component parts. 
C) Finished goods. 
D) All of these. 
E) None of these.

Question 17

An inventory system whose current inventory level is monitored with each change is called a periodic-review system.

Accepted Answer

A) True 
 B)False

Question 18

In the basic EOQ model,if annual demand doubles what is the effect on the EOQ?

Accepted Answer

A) It doubles. 
B) It is four times its previous amount. 
C) It is half its previous amount. 
D) It is about 70% of its previous amount. 
E) It increases by about 40%. 
A) It doubles. 
B) It is four times its previous amount. 
C) It is half its previous amount. 
D) It is about 70% of its previous amount. 
E) It increases by about 40%.

Question 19

If the cost of holding inventory is high relative to shortage costs,then allowing shortages may be a good policy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following items would be most likely to have dependent demand?

Accepted Answer

A) Electric starters. 
B) Toy trains. 
C) Flowers. 
D) Chocolate chip cookies. 
E) None of the above. 
A) Electric starters. 
B) Toy trains. 
C) Flowers. 
D) Chocolate chip cookies. 
E) None of the above.

Exam 21: CD - Inventory Management With Known Demand

Which of the following is not true for the EOQ model with gradual replenishment?

When developing an inventory policy,the only relevant costs are the variable costs.

Which of the following is not included in setup costs?

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages.

In the EOQ model with quantity discounts,if holding costs are given as a percentage of unit price,a graph of the total cost curves will have the same EOQ for each curve.

The JIT philosophy is one of avoiding waste wherever it might occur in the production process. Multiple Choice Questions

Subassemblies are an example of independent demand items.

Which of the following are part of a MRP system?

Setup costs can occur through purchasing or manufacturing products.

EOQ inventory models are basically concerned with the timing of orders.

Inspection of goods for quality and quantity upon arrival is part of setup costs.

The EOQ approach minimizes annual setup costs.

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

MRP is a system for determining optimal order quantities for dependent-demand products.

In the basic EOQ model,annual setup cost is equal to:

Which of the following would generally have independent demand?

An inventory system whose current inventory level is monitored with each change is called a periodic-review system.

In the basic EOQ model,if annual demand doubles what is the effect on the EOQ?

If the cost of holding inventory is high relative to shortage costs,then allowing shortages may be a good policy.

Which of the following items would be most likely to have dependent demand?

Introduction

Linear Programming: Basic Concepts

Linear Programming: Formulation and Applications

The Art of Modeling With Spreadsheets

What-If Analysis for Linear Programming

Network Optimization Problems

Using Binary Integer Programming to Deal With Yes-Or-No Decisions

Nonlinear Programming

Decision Analysis

Cd Supplement - Decision Analysis

Forecasting

Queueing Models

CD Supplement - Additional Queueing Models

Computer Simulation: Basic Concepts

CD Supplement - the Inverse Transformation Method for Generating Random Observations

Computer Simulation With Crystal Ball

CD - Solution Concepts for Linear Programming

CD - Transportation and Assignment Problems

CD - Pertcpm Models for Project Management

CD - Goal Programming

CD - Inventory Management With Uncertain Demand

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