Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

An auto parts store (open 350 days per year) in a major metropolitan area reviews its inventory on a periodic basis using a computer system.It has recently been experiencing some problems with a particular part, a tune?up kit.The kit is bought from a U.S.manufacturer.The annual demand for these kits is 10,500.The cost to carry one kit in inventory for one year is $4.90, and the cost to place a replenishment order is $17 per order.Replenishment lead time is 4 days.
a.What should be the review period for these tune-up kits?
b.What is the optimal replenishment level without safety stock?
c.What is the optimal replenishment level with safety stock, assuming a 95 percent service level?

Accepted Answer

a.EOQ = Q* = Sq.root of [2(10,500)(17)/4

Question 3

Independent demand

Accepted Answer

A) can be derived/calculated 
B) is related to other SKUs 
C) is also called finished goods inventory 
D) needs to be forecasted 
A) can be derived/calculated 
B) is related to other SKUs 
C) is also called finished goods inventory 
D) needs to be forecasted

Question 4

Lead time is the time it takes to prepare an order for shipping to a customer.

Accepted Answer

A) True 
 B)False

Question 5

Explain the difference between independent demand and dependent demand.

Accepted Answer

Independent demand is demand for a SKU t

Question 6

The recently hired floor manager at the local store of a national home improvement chain is studying their inventory system.He has chosen patio blocks to be the first item examined.The historical supply and demand data for this item has indicated a constant lead time of 16 days.Demand per day (d) is normally distributed with a mean demand of 2000 per day and standard deviation of 240 per day.He plans to set the service level at 90% during lead time.
a.What is the average demand during lead time?
b.What is the amount of safety stock of blocks he should keep on hand?
c.What is the order point he should use?

Accepted Answer

a.@#LAT-DLM&_L = @#LAT-DLM&_tT = 2000(16

Question 7

Define the EOQ model and explain its major assumptions.

Accepted Answer

The Economic Order Quantity (EOQ) Model

Question 8

Using ABC analysis, continuous monitoring and accurate record keeping relates best to ____ items.

Accepted Answer

A) A 
B) B 
C) C 
D) B and C 
A) A 
B) B 
C) C 
D) B and C

Question 9

A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ) approach for a popular table set that they have had difficulty keeping in stock.They have the following information about the table set:
Annual demand = 3,920 sets
Current order quantity = 80 sets
Carrying cost = $80.00/set/year
Order cost = $200
a.What is the current total annual cost (TC)?
b.What is the EOQ?
c.What is the total annual cost at the EOQ?

Accepted Answer

a.TC = (Q/2) C_o + (D/Q) C_h = (80/2) 80 + (

Question 10

Which one of the following is not true regarding the Fixed Period System (FPS)?

Accepted Answer

A) The time between orders is constant, but the order quantity might vary. 
B) An order is time-triggered, not inventory-triggered. 
C) The optimal replenishment level includes the demand during the review period plus any desired safety stock. 
D) When demand is not certain, the FPS requires more safety stock than the equivalent FQS. 
A) The time between orders is constant, but the order quantity might vary. 
B) An order is time-triggered, not inventory-triggered. 
C) The optimal replenishment level includes the demand during the review period plus any desired safety stock. 
D) When demand is not certain, the FPS requires more safety stock than the equivalent FQS.

Question 11

Many practical inventory situations include backorders and quantity discounts.

Accepted Answer

A) True 
 B)False

Question 12

For the single-period inventory model, solving for the optimal order quantity involves using

Accepted Answer

A) marginal economic analysis 
B) total cost analysis 
C) ABC analysis 
D) reorder point analysis 
A) marginal economic analysis 
B) total cost analysis 
C) ABC analysis 
D) reorder point analysis

Question 13

A merchant wants to stock Christmas trees.She can place only one order per season.The merchant pays $30 for each tree and sells them for $80 each.She will incur an additional cost of $6 each for unsold trees that must be hauled to the landfill.If demand for Christmas trees is normally distributed with a mean of 365 trees and a standard deviation of 46 trees, how many trees should she order?

Accepted Answer

c_u = 80 - 30 = 50 c

Question 14

"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 15

Inventory position is computed using all the following except

Accepted Answer

A) On-hand 
B) Scheduled receipts 
C) Backorders 
D) Lead time demand 
A) On-hand 
B) Scheduled receipts 
C) Backorders 
D) Lead time demand

Question 16

Which is not an advantage of the periodic review system?

Accepted Answer

A) Helps to control "A" items 
B) Inventory need not be monitored continually 
C) Useful when a large number of items is ordered from the same supplier 
D) Consolidated shipments lower freight costs 
A) Helps to control "A" items 
B) Inventory need not be monitored continually 
C) Useful when a large number of items is ordered from the same supplier 
D) Consolidated shipments lower freight costs

Question 17

Inventory holding costs can be accurately measured by accounting departments.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is incorrect regarding inventory management?

Accepted Answer

A) The two fundamental inventory decisions are when 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) SKUs are often aggregated or partitioned into groups with similar characteristics or dollar value 
A) The two fundamental inventory decisions are when 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) SKUs are often aggregated or partitioned into groups with similar characteristics or dollar value

Question 19

Using the data below, find the EOQ, the total annual cost associated with the economic order quantity, and the reorder point.

Accepted Answer

@#IMG-DLM& Q* = Sq.root of (2 @#LAT-DLM& 15000 @#LAT-DLM& 60/7) = 507

Question 20

Setup costs depend on the number of items manufactured.

Accepted Answer

A) True 
 B)False

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

Independent demand

Lead time is the time it takes to prepare an order for shipping to a customer.

Explain the difference between independent demand and dependent demand.

Define the EOQ model and explain its major assumptions.

Using ABC analysis, continuous monitoring and accurate record keeping relates best to ____ items.

Which one of the following is not true regarding the Fixed Period System (FPS)?

Many practical inventory situations include backorders and quantity discounts.

For the single-period inventory model, solving for the optimal order quantity involves using

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

Inventory position is computed using all the following except

Which is not an advantage of the periodic review system?

Inventory holding costs can be accurately measured by accounting departments.

Which of the following is incorrect regarding inventory management?

Using the data below, find the EOQ, the total annual cost associated with the economic order quantity, and the reorder point.

Setup costs depend on the number of items manufactured.

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 Design

Supply Chain Design

Capacity Management

Forecasting and Demand Planning

Resource Management

Operations Scheduling and Sequencing

Quality Management

Quality Control and Spc

Lean Operating Systems

Project Management

Work Measurement, Learning Curves, and Standards

Queuing Analysis

Modeling Using Linear Programming

Simulation

Decision Analysis

Filters

Exam 12: Managing Inventories

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

Independent demand

Lead time is the time it takes to prepare an order for shipping to a customer.

Explain the difference between independent demand and dependent demand.

Define the EOQ model and explain its major assumptions.

Using ABC analysis, continuous monitoring and accurate record keeping relates best to ____ items.

Which one of the following is not true regarding the Fixed Period System (FPS)?

Many practical inventory situations include backorders and quantity discounts.

For the single-period inventory model, solving for the optimal order quantity involves using

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

Inventory position is computed using all the following except

Which is not an advantage of the periodic review system?

Inventory holding costs can be accurately measured by accounting departments.

Which of the following is incorrect regarding inventory management?

Using the data below, find the EOQ, the total annual cost associated with the economic order quantity, and the reorder point.

Setup costs depend on the number of items manufactured.

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 Design

Supply Chain Design

Capacity Management

Forecasting and Demand Planning

Resource Management

Operations Scheduling and Sequencing

Quality Management

Quality Control and Spc

Lean Operating Systems

Project Management

Work Measurement, Learning Curves, and Standards

Queuing Analysis

Modeling Using Linear Programming

Simulation

Decision Analysis

Filters