Question 1

"A" items typically comprise a high percentage of total dollar usage but a low percentage of unit volume.

Accepted Answer

A) True 
 B)False

Question 2

Demand that incorporates uncertainty is called _____ demand.

Accepted Answer

A)  statistical 
B)  average 
C)  stochastic 
D)  deterministic 
A)  statistical 
B)  average 
C)  stochastic 
D)  deterministic

Question 3

Demand that is stable over time is called _____ demand.

Accepted Answer

A)  static 
B)  dynamic 
C)  statistical 
D)  average 
A)  static 
B)  dynamic 
C)  statistical 
D)  average

Question 4

"C" items are the critical few that must be closely managed in an inventory system.

Accepted Answer

A) True 
 B)False

Question 5

Additional inventory that is kept over and above the average amount required to meet demand is called _____ inventory.

Accepted Answer

A)  seasonal 
B)  work-in-process 
C)  finished goods 
D)  safety stock 
A)  seasonal 
B)  work-in-process 
C)  finished goods 
D)  safety stock

Question 6

Discuss the two types of stockouts.

Accepted Answer

The two types of stockouts are: backorde

Question 7

In a fixed order quantity (FOQ) system, which of the following is TRUE when interest rates increase and all other costs remain the same?

Accepted Answer

A)  Cycle inventory decreases 
B)  Order quantity increases 
C)  Order costs increase 
D)  Safety stock quantity increases 
A)  Cycle inventory decreases 
B)  Order quantity increases 
C)  Order costs increase 
D)  Safety stock quantity increases

Question 8

In a fixed quantity inventory system with certain demand, the reorder point is chosen to be the average demand during the lead time.

Accepted Answer

A) True 
 B)False

Question 9

A hotel purchases 8,000 gallons of a cleaning product. Each gallon costs $10, and the cost of holding one gallon for a year is estimated to be $3. Ordering cost amounts to $30 per order.
a.If the hotel orders in lots of 500 gallons, how many orders does it place each year?
b.What are the ordering and holding costs, and total annual cost?
c.If the economic ordering quantity is used, how much improvement in cost will result?

Accepted Answer

The answer of A hotel purchases 8,000 gallons of a...

Question 10

Which of the following statements is NOT TRUE?

Accepted Answer

A)  Inventory is any asset held for future use or sale. 
B)  When using ABC analysis, "C" items comprise of a small dollar value. 
C)  Stock keeping unit (SKU) is a single item or asset stored at multiple locations. 
D)  The lead time is the time between placement of an order and its receipt. 
A)  Inventory is any asset held for future use or sale. 
B)  When using ABC analysis, "C" items comprise of a small dollar value. 
C)  Stock keeping unit (SKU) is a single item or asset stored at multiple locations. 
D)  The lead time is the time between placement of an order and its receipt.

Question 11

Explain the different types of inventories maintained throughout a value chain.

Accepted Answer

Raw materials, component parts, subassem

Question 12

Zainab opens an aquarium store in a lively shopping mall and finds business to be booming, but she often stocks out of key items customers want. She decides to experiment with inventory control methods such as using a fixed order quantity (FQS) and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and profitable pump, is one of her best sellers, but it stocks out frequently. She collects the following data with respect to this pump's sales:
$\begin{array} { l l } 
\text { Demand } = 5 \text { units per week } & \text { Store operates } 50 \text { weeks } / \text { year } \
\text { Order cost } = \$ 40 / \text { order } & \text { Lead time } = 3 \text { weeks } \
\text { Item cost } = \$ 80 / \text { pump } & \
\text { Inventory-holding cost } = 15 \% \text { per year } &
\end{array}$
-If Zainab decides to use a fixed-period system (FPS), the fixed-order interval based on store economics is:

Accepted Answer

A)  less than 5 weeks. 
B)  more than 5 but less than or equal to 10 weeks. 
C)  more than 10 but less than or equal to 15 weeks. 
D)  more than 15 but less than or equal to 20 weeks. 
A)  less than 5 weeks. 
B)  more than 5 but less than or equal to 10 weeks. 
C)  more than 10 but less than or equal to 15 weeks. 
D)  more than 15 but less than or equal to 20 weeks.

Question 13

Which of the following is NOT a key input in a single-period inventory model?

Accepted Answer

A)  Probability distribution of demand 
B)  Probability that demand is less than the optimal order quantity 
C)  Cost per item of overestimating demand 
D)  Cost per item of underestimating demand 
A)  Probability distribution of demand 
B)  Probability that demand is less than the optimal order quantity 
C)  Cost per item of overestimating demand 
D)  Cost per item of underestimating demand

Question 14

Costs associated with configuring tools, equipment, and machines within a factory to produce an item are components of _____ costs.

Accepted Answer

A)  ordering 
B)  inventory-holding 
C)  shortage 
D)  unit 
A)  ordering 
B)  inventory-holding 
C)  shortage 
D)  unit

Question 15

Using the data below, find the economic order quantity (EOQ), the total annual cost associated with the economic order quantity, and the reorder point. 
$\begin{array}{|l|l|}
\hline\text { Annual Demand: } & 8,000 \text { units } \
\hline \text { Weeks Operating: } & 52 / \text { year } \\hline \text { Ordering Cost: } & \$ 35 / \text { order } \
\hline \text { Holding Cost: } & \$ 4 / \text { unit/year } \
\hline \text { Lead Time: } & 3 \text { weeks }\
\hline
\end{array}$

Accepted Answer

Q* = Sq. root of (2 * 8000 * 35/4) = 374

Question 16

Table 1
Jackson Enterprises uses a fixed order quantity inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand $ =20,000 $ units/year
Ordering cost $ =\$ 45 / $ order
Inventory-carrying cost as a percent of item value $ =25 \% $
Item (Unit) value $ =\$ 20 $
Lead time $ =5 $ weeks
Standard deviation in weekly demand $ =125 $ units
-Using the information in Table 1, if the service level is 96 percent, what is the reorder point?

Accepted Answer

A)  Less than or equal to 2,800 units 
B)  Greater than 2,800 but less than or equal to 3,200 units 
C)  Greater than 3,200 but less than or equal to 3,600 units 
D)  Greater than 3,600 units 
A)  Less than or equal to 2,800 units 
B)  Greater than 2,800 but less than or equal to 3,200 units 
C)  Greater than 3,200 but less than or equal to 3,600 units 
D)  Greater than 3,600 units

Question 17

Kelly opens an aquarium store in a lively shopping mall and finds business to be booming, but she often stocks out of key items customers want. She decides to experiment with inventory control methods such as using a fixed order quantity (FQS) and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and profitable pump, is one of her best sellers, but it stocks out frequently. She collects the following data about the pump's sales.
$\begin{array} { l l } 
\text { Demand } = 10 \text { units per week } & \text { Store operates } 45 \text { weeks } / \text { year } \
\text { Order cost } = \$ 30 / \text { order } & \text { Lead time } = 3 \text { weeks } \
\text { Item cost } = \$ 80 / \text { pump } & \text { Standard deviation of weekly demand } = 4 \text { units } \
\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Desired service level } = 90 \text { percent }
\end{array}$
-If Kelly decides to use a fixed-period system (FPS), the fixed-order interval (T) based on store economics is:

Accepted Answer

A)  less than or equal to 5 weeks. 
B)  more than 5 but less than or equal to 10 weeks. 
C)  more than 10 but less than or equal to 15 weeks. 
D)  more than 15 but less than or equal to 20 weeks. 
A)  less than or equal to 5 weeks. 
B)  more than 5 but less than or equal to 10 weeks. 
C)  more than 10 but less than or equal to 15 weeks. 
D)  more than 15 but less than or equal to 20 weeks.

Question 18

Table 1
Peterson Enterprises uses a fixed order quantity inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand $= 50,000$ units/year
Ordering cost $= \$ 35 /$ order
Inventory-carrying cost as a percent of item value $= 25 \%$
Item (Unit) value $= \$ 8$
Lead time $= 3$ weeks
Standard deviation in weekly demand $= 125$ units
-Using the information in Table 1, calculate the economic order quantity (EOQ) for this item?

Accepted Answer

A)  Less than or equal to 1200 units 
B)  Greater than 1200 but less than or equal to 1400 units 
C)  Greater than 1400 but less than or equal to 1600 units 
D)  Greater than 1600 units 
A)  Less than or equal to 1200 units 
B)  Greater than 1200 but less than or equal to 1400 units 
C)  Greater than 1400 but less than or equal to 1600 units 
D)  Greater than 1600 units

Question 19

Opportunity cost of capital is an example of ordering cost.

Accepted Answer

A) True 
 B)False

Question 20

In a single-period inventory situation, the only inventory decision is when to trigger an order.

Accepted Answer

A) True 
 B)False

"A" items typically comprise a high percentage of total dollar usage but a low percentage of unit volume.

Demand that incorporates uncertainty is called _____ demand.

Demand that is stable over time is called _____ demand.

"C" items are the critical few that must be closely managed in an inventory system.

Additional inventory that is kept over and above the average amount required to meet demand is called _____ inventory.

Discuss the two types of stockouts.

In a fixed order quantity (FOQ) system, which of the following is TRUE when interest rates increase and all other costs remain the same?

In a fixed quantity inventory system with certain demand, the reorder point is chosen to be the average demand during the lead time.

Which of the following statements is NOT TRUE?

Explain the different types of inventories maintained throughout a value chain.

Which of the following is NOT a key input in a single-period inventory model?

Costs associated with configuring tools, equipment, and machines within a factory to produce an item are components of _____ costs.

Using the data below, find the economic order quantity (EOQ), the total annual cost associated with the economic order quantity, and the reorder point. Annual Demand: 8,000 units Weeks Operating: 52/ year Ordering Cost: \ 35/ order Holding Cost: \ 4/ unit/year Lead Time: 3 weeks

Opportunity cost of capital is an example of ordering cost.

In a single-period inventory situation, the only inventory decision is when to trigger an order.

Goods, Services, and Operations Management

Value Chains

Measuring Performance in Operations

Operations Strategy

Technology and Operations Management

Goods and Service Design

Process Selection, Design, and Analysis

Facility and Work Designs

Supply Chain Design

Capacity Management

Forecasting and Demand Planning

Resource Management

Operations Scheduling and Sequencing

Quality Management

Appendix: Quality Management

Quality Control and Spc

Appendix: Queuing Analysis

Appendix: Modeling Using Linear Programming

Lean Operating Systems

Appendix: Simulation

Project Management

Appendix: Decision Analysis

Filters

Exam 12: Managing Inventories

"A" items typically comprise a high percentage of total dollar usage but a low percentage of unit volume.

Demand that incorporates uncertainty is called _____ demand.

Demand that is stable over time is called _____ demand.

"C" items are the critical few that must be closely managed in an inventory system.

Additional inventory that is kept over and above the average amount required to meet demand is called _____ inventory.

Discuss the two types of stockouts.

In a fixed order quantity (FOQ) system, which of the following is TRUE when interest rates increase and all other costs remain the same?

In a fixed quantity inventory system with certain demand, the reorder point is chosen to be the average demand during the lead time.

Which of the following statements is NOT TRUE?

Explain the different types of inventories maintained throughout a value chain.

Which of the following is NOT a key input in a single-period inventory model?

Costs associated with configuring tools, equipment, and machines within a factory to produce an item are components of _____ costs.

Using the data below, find the economic order quantity (EOQ), the total annual cost associated with the economic order quantity, and the reorder point. Annual Demand: 8,000 units Weeks Operating: 52/ year Ordering Cost: \ 35/ order Holding Cost: \ 4/ unit/year Lead Time: 3 weeks

Opportunity cost of capital is an example of ordering cost.

In a single-period inventory situation, the only inventory decision is when to trigger an order.

Goods, Services, and Operations Management

Value Chains

Measuring Performance in Operations

Operations Strategy

Technology and Operations Management

Goods and Service Design

Process Selection, Design, and Analysis

Facility and Work Designs

Supply Chain Design

Capacity Management

Forecasting and Demand Planning

Resource Management

Operations Scheduling and Sequencing

Quality Management

Appendix: Quality Management

Quality Control and Spc

Appendix: Queuing Analysis

Appendix: Modeling Using Linear Programming

Lean Operating Systems

Appendix: Simulation

Project Management

Appendix: Decision Analysis

Filters