Question 1

Radio-frequency identification (RFID) tags are used to track stock-keeping units in supply chains.

Accepted Answer

A) True 
 B)False

Question 2

Heather, manager of a large medical supply house that operates 45 weeks per year and 5 days per week, has decided to implement a fixed-period inventory system for all class A items. One such item has the following characteristics:
Demand = 8,000 units/year
Order cost = $40/order
Holding cost = $4/unit/year
If Heather wishes to minimize total cost (thereby approximating the economic order quantity (EOQ)), what should be T, the number of workdays between orders (i.e., review period)?

Accepted Answer

Q* = Sq. root of [2(

Question 3

Brenda opens a pool and spa 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 28-ounce bottle of Super Algaecide (SA) is a high margin stock keeping unit (SKU), but it stocks out frequently. Ten SA bottles come in each box, and she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom has time to review store inventory status and order the right quantity at the right time. She collects the following data with respect to these SA sales.
$\begin{array} { l l } 
\text { Demand } = 10 \text { boxes per week } & \text { Store operates } 50 \text { weeks } / \text { year } \
\text { Order cost } = \$ 40 / \text { order } & \text { Lead time } = 3 \text { weeks } \
\text { Item cost } = \$ 80 / \text { box } & \text { Std. deviation in weekly demand } = 6 \
\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Service level } = 96 \%
\end{array}$
-The reorder point for Super Algaecide (SA) with safety stock is:

Accepted Answer

A)  less than 20 boxes. 
B)  more than 20 but less than or equal to 30 boxes. 
C)  more than 30 but less than or equal to 40 boxes. 
D)  more than 40 but less than or equal to 50 boxes. 
A)  less than 20 boxes. 
B)  more than 20 but less than or equal to 30 boxes. 
C)  more than 30 but less than or equal to 40 boxes. 
D)  more than 40 but less than or equal to 50 boxes.

Question 4

An airline seat is an example of an asset held for future use or sale.

Accepted Answer

A) True 
 B)False

Question 5

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.
$\begin{array} { l l } 
\text { Demand } = 10 \text { units per week } & \text { Store operates } 45 \text { weeks } / \text { year } \
\text { Order cost } = \$ 30 / \text { order } & \text { Lead time } = 3 \text { weeks } \
\text { Item cost } = \$ 80 / \text { pump } & \text { Standard deviation of weekly demand } = 4 \text { units } \
\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Desired service level } = 90 \text { percent }
\end{array}$
-The reorder point with safety stock rounded to the next highest whole number is:

Accepted Answer

A)  less than 15 pumps. 
B)  more than 15 but less than or equal to 25 pumps. 
C)  more than 25 but less than or equal to 40 pumps. 
D)  more than 40 pumps. 
A)  less than 15 pumps. 
B)  more than 15 but less than or equal to 25 pumps. 
C)  more than 25 but less than or equal to 40 pumps. 
D)  more than 40 pumps.

Question 6

Maria 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 details with respect to this pump's sales. $\begin{array}{|l|l|}
\hline \text { Demand }=10 \text { units per week } & \text { Store operates } 50 \text { weeks/year } \
\hline \text { Order cost }=\$ 35 / \text { order } & \text { Lead time }=3 \text { weeks } \
\hline \text { Item cost }=\$ 70 / \text { pump } & \
\hline \text { Inventory-holding cost }=10 \% \text { per year } & \
\hline
\end{array}$ 
a.What is the economic order quantity (EOQ) rounded to the next highest number?
b.If the current order quantity used by Maria is 25 pumps per order, how much money can she save annually by adopting an economic order quantity (EOQ) ordering policy?
c.If Maria decides to use an FPS, what is the economic fixed-order interval?

Accepted Answer

a.Q* = Sq. root of [2(500)(35)/7] = 70.7

Question 7

Explain the difference between independent demand and dependent demand.

Accepted Answer

Independent demand is demand for a stock

Question 8

A bookstore must decide on how many calendars to order for the next year. Each calendar costs $2 and is sold for $4.50. After January 1, any unsold calendars are returned to the publisher for a refund of $0.75 each. The distribution of demand is uniform between 100 and 300. How many calendars should the bookstore order?

Accepted Answer

c_u = 4.50 - 2 = 2.5

Question 9

Which is NOT a feature of the periodic review system?

Accepted Answer

A)  The order quantity, Q, is always fixed. 
B)  The inventory position need not be monitored on a continuous basis. 
C)  The review period, T, is constant. 
D)  Placing an order is time-triggered. 
A)  The order quantity, Q, is always fixed. 
B)  The inventory position need not be monitored on a continuous basis. 
C)  The review period, T, is constant. 
D)  Placing an order is time-triggered.

Question 10

Inventory position refers to the physical quantity of items on hand in an inventory system.

Accepted Answer

A) True 
 B)False

Question 11

Work-in-process inventory is completed products ready for distribution or sale to customers.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is NOT TRUE regarding inventory management?

Accepted Answer

A)  The two fundamental inventory decisions are: where to order and what to order. 
B)  Inventory management applies to goods and to services. 
C)  Different types of inventory characteristics require different approaches for control. 
D)  Stock-keeping units (SKUs) are often aggregated or partitioned into groups with similar characteristics or dollar value. 
A)  The two fundamental inventory decisions are: where to order and what to order. 
B)  Inventory management applies to goods and to services. 
C)  Different types of inventory characteristics require different approaches for control. 
D)  Stock-keeping units (SKUs) are often aggregated or partitioned into groups with similar characteristics or dollar value.

Question 13

Airline flights to ski areas near Denver, Colorado, probably have different means and variances throughout the year. This is an example of dynamic demand.

Accepted Answer

A) True 
 B)False

Question 14

Illustrate the single-period inventory model with an example.

Accepted Answer

The single-period inventory model applie

Question 15

Costs associated with maintaining storage facilities such as gas and electricity, taxes, and insurance are associated with fixed ordering costs.

Accepted Answer

A) True 
 B)False

Question 16

Inventory-holding costs are easily measured by accounting departments.

Accepted Answer

A) True 
 B)False

Question 17

_____ inventory acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue.

Accepted Answer

A)  Raw materials 
B)  Work-in-process 
C)  Cycle stock 
D)  Safety stock 
A)  Raw materials 
B)  Work-in-process 
C)  Cycle stock 
D)  Safety stock

Radio-frequency identification (RFID) tags are used to track stock-keeping units in supply chains.

An airline seat is an example of an asset held for future use or sale.

Explain the difference between independent demand and dependent demand.

Which is NOT a feature of the periodic review system?

Inventory position refers to the physical quantity of items on hand in an inventory system.

Work-in-process inventory is completed products ready for distribution or sale to customers.

Which of the following is NOT TRUE regarding inventory management?

Airline flights to ski areas near Denver, Colorado, probably have different means and variances throughout the year. This is an example of dynamic demand.

Illustrate the single-period inventory model with an example.

Costs associated with maintaining storage facilities such as gas and electricity, taxes, and insurance are associated with fixed ordering costs.

Inventory-holding costs are easily measured by accounting departments.

_____ inventory acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue.

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

Radio-frequency identification (RFID) tags are used to track stock-keeping units in supply chains.

An airline seat is an example of an asset held for future use or sale.

Explain the difference between independent demand and dependent demand.

Which is NOT a feature of the periodic review system?

Inventory position refers to the physical quantity of items on hand in an inventory system.

Work-in-process inventory is completed products ready for distribution or sale to customers.

Which of the following is NOT TRUE regarding inventory management?

Airline flights to ski areas near Denver, Colorado, probably have different means and variances throughout the year. This is an example of dynamic demand.

Illustrate the single-period inventory model with an example.

Costs associated with maintaining storage facilities such as gas and electricity, taxes, and insurance are associated with fixed ordering costs.

Inventory-holding costs are easily measured by accounting departments.

_____ inventory acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue.

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