Question 1

Inventory that acts as a buffer between workstations in flow shops or departments in job shops is called ____ inventory.

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

Question 2

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

Accepted Answer

@#LAT-DLM&
 Q* = Sq. root of (2 x 8000 x 35/4) = 3

Question 3

Demand that is stable over time is called ____.

Accepted Answer

A) Static 
B) Dynamic 
C) Stochastic 
D) Deterministic 
A) Static 
B) Dynamic 
C) Stochastic 
D) Deterministic

Question 4

When a customer is unwilling to wait for an item that is not in stock and purchases the item elsewhere, a backorder has occurred.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following statements is true?

Accepted Answer

A) The level of safety stock maintained decreases when the desired cycle-service level increases. 
B) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases. 
C) In a fixed period inventory system, the value of Q is kept the same from one cycle to another. 
D) When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles. 
A) The level of safety stock maintained decreases when the desired cycle-service level increases. 
B) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases. 
C) In a fixed period inventory system, the value of Q is kept the same from one cycle to another. 
D) When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles.

Question 6

Explain the ABC inventory classification.

Accepted Answer

ABC analysis consists of categorizing in

Question 7

Which one of the following statements is true?

Accepted Answer

A) The EOQ is most accurate when both inventory and order costs are estimated on a full cost basis. 
B) The EOQ is most accurate when both inventory and order costs are estimated on a pure variable cost basis. 
C) The EOQ is most accurate when inventory costs are estimated on a full cost basis while order costs are estimated on a pure variable cost basis. 
D) The EOQ is most accurate when inventory costs are estimated on a pure variable cost basis while order costs are estimated on a full cost basis. 
A) The EOQ is most accurate when both inventory and order costs are estimated on a full cost basis. 
B) The EOQ is most accurate when both inventory and order costs are estimated on a pure variable cost basis. 
C) The EOQ is most accurate when inventory costs are estimated on a full cost basis while order costs are estimated on a pure variable cost basis. 
D) The EOQ is most accurate when inventory costs are estimated on a pure variable cost basis while order costs are estimated on a full cost basis.

Question 8

Discuss the concept of safety stock in a fixed order quantity system with uncertain demand.

Accepted Answer

Stockouts occur whenever the lead-time d

Question 9

Many practical inventory situations include backorders and quantity discounts.

Accepted Answer

A) True 
 B)False

Question 10

Demand that incorporates uncertainty is called ____.

Accepted Answer

A) Static 
B) Dynamic 
C) Stochastic 
D) Deterministic 
A) Static 
B) Dynamic 
C) Stochastic 
D) Deterministic

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The decision of how many fruit baskets to make for the holiday season would be analyzed using a single-period inventory model.

Accepted Answer

A) True 
 B)False

Question 13

Define the EOQ model and explain its major assumptions.

Accepted Answer

The Economic Order Quantity (EOQ) Model

Question 14

Because the fixed quantity system orders the same amount each time, time between orders will be constant, even with variable demand.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Inventory that represents partially completed products waiting further processing is called ____ inventory.

Accepted Answer

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

Question 17

What is inventory management and why is it important?

Accepted Answer

Inventory management involves planning,

Question 18

Costs associated with inspecting, unpacking and putting into storage incoming inventory are components of ____ cost.

Accepted Answer

A) Ordering or setup 
B) Holding 
C) Shortage 
D) Unit 
A) Ordering or setup 
B) Holding 
C) Shortage 
D) Unit

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Because of demanding customers, organizations must always maintain a 100% service level.

Accepted Answer

A) True 
 B)False

Exam 12: Managing Inventories

Inventory that acts as a buffer between workstations in flow shops or departments in job shops is called ____ inventory.

Using the data below, find the 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/ arder Holding Cost: \ 4/ unityear Lead-Time: 3 weeks

Demand that is stable over time is called ____.

When a customer is unwilling to wait for an item that is not in stock and purchases the item elsewhere, a backorder has occurred.

Which one of the following statements is true?

Explain the ABC inventory classification.

Which one of the following statements is true?

Discuss the concept of safety stock in a fixed order quantity system with uncertain demand.

Many practical inventory situations include backorders and quantity discounts.

Demand that incorporates uncertainty is called ____.

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

The decision of how many fruit baskets to make for the holiday season would be analyzed using a single-period inventory model.

Define the EOQ model and explain its major assumptions.

Because the fixed quantity system orders the same amount each time, time between orders will be constant, even with variable demand.

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

Inventory that represents partially completed products waiting further processing is called ____ inventory.

What is inventory management and why is it important?

Costs associated with inspecting, unpacking and putting into storage incoming inventory are components of ____ cost.

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

Because of demanding customers, organizations must always maintain a 100% service level.

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