Question 1

Just-in-case inventory management is a traditional inventory model based on a wait-until-needed demand.

Accepted Answer

A) True 
 B)False

Question 2

Reducing ordering and setup costs interfere with the reduction of inventory costs.

Accepted Answer

A) True 
 B)False

Question 3

The economic order quantity is the order quantity that results in

Accepted Answer

A)  the minimum total annual inventory costs. 
B)  the maximum total annual inventory costs. 
C)  no inventory shortages. 
D)  minimum ordering costs. 
A)  the minimum total annual inventory costs. 
B)  the maximum total annual inventory costs. 
C)  no inventory shortages. 
D)  minimum ordering costs.

Question 4

the process of continuous replacement of inventory has been made easier by the use of __________ interchanges.

Accepted Answer

The answer of the process of continuous replacement of inventory...

Question 5

Commonwealth Dry Cleaners has 400 hours a week available to use in dry cleaning or laundry. Four thousand inches of hanging space is available. The average item that is dry cleaned takes six inches of hanging space, whereas laundry items take up only three inches of hanging space. The contribution margin for laundry items averages $3.50; dry cleaned items average $6.50. Fifty items can be washed per hour, whereas only twenty can be dry cleaned.
Required:

Accepted Answer

The answer of Commonwealth Dry Cleaners has 400 hours a...

Question 6

Figure 20 - 1 Moriah's Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
Refer to Figure 20-1. The lead time is 4 working days, the average rate of usage is 60 containers per day, and the company carries a safety stock of 25 containers. What is the reorder point?

Accepted Answer

A)  285 containers 
B)  245 containers 
C)  265 containers 
D)  225 containers 
A)  285 containers 
B)  245 containers 
C)  265 containers 
D)  225 containers

Question 7

One of the traditional reasons for holding inventory is to minimize total carrying costs and setup costs. The JIT solution is to

Accepted Answer

A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control. 
A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control.

Question 8

Inventory management identifies an economic order quantity that

Accepted Answer

A)  minimizes the total costs of ordering and carrying inventory. 
B)  maximizes the stockout costs. 
C)  minimizes the costs of ordering. 
D)  maximizes the cost of carrying inventory. 
A)  minimizes the total costs of ordering and carrying inventory. 
B)  maximizes the stockout costs. 
C)  minimizes the costs of ordering. 
D)  maximizes the cost of carrying inventory.

Question 9

Figure 20-4 Montgomery Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
  Refer to Figure 20-4. What is the constraint on machine hours for Montgomery Company?

Accepted Answer

A)  2A + 5B £ 500 
B)  2A + 5B £ 300 
C)  6A + 3B £ 500 
D)  40A + 30B £ 500 
A)  2A + 5B £ 500 
B)  2A + 5B £ 300 
C)  6A + 3B £ 500 
D)  40A + 30B £ 500

Question 10

JIT uses long-term contracts, continuous refilling, and electronic data interchanges to reduce or eliminate ordering costs.

Accepted Answer

A) True 
 B)False

Question 11

The cost of acquiring inventory includes

Accepted Answer

A)  setup costs for goods produced internally. 
B)  cost of insurance on the warehouse for inventory. 
C)  cost of not having a product when a customer wants one. 
D)  cost of obsolescence. 
A)  setup costs for goods produced internally. 
B)  cost of insurance on the warehouse for inventory. 
C)  cost of not having a product when a customer wants one. 
D)  cost of obsolescence.

Question 12

Using the graphic approach to linear programming, the solution is usually

Accepted Answer

A)  a corner point where two or more constraints intersect. 
B)  where the lines intersect farthest from zero. 
C)  the point farthest from the Y-axis. 
D)  the point farthest from the X-axis. 
A)  a corner point where two or more constraints intersect. 
B)  where the lines intersect farthest from zero. 
C)  the point farthest from the Y-axis. 
D)  the point farthest from the X-axis.

Question 13

When comparing the traditional approach of inventory management to JIT, which of the following statements is true?

Accepted Answer

A)  The traditional approach accepts the existence of setup costs, but not carrying costs or inventories. JIT accepts the existence of setup and carrying costs, but pushes for zero inventories. 
B)  The traditional approach accepts the existence of carrying costs and inventories, but not setup costs. JIT accepts the existence of setup costs but not carrying costs and pushes for zero inventories. 
C)  The traditional approach accepts the existence of both setup costs and carrying costs and attempts to find the order quantity that best balances those costs. JIT does not accept either setup costs or carrying costs and pushes for zero inventory levels. 
D)  The traditional approach does not accept carrying costs or setup costs. JIT minimizes both setup and carrying costs by finding the best order quantity to balance these costs. 
A)  The traditional approach accepts the existence of setup costs, but not carrying costs or inventories. JIT accepts the existence of setup and carrying costs, but pushes for zero inventories. 
B)  The traditional approach accepts the existence of carrying costs and inventories, but not setup costs. JIT accepts the existence of setup costs but not carrying costs and pushes for zero inventories. 
C)  The traditional approach accepts the existence of both setup costs and carrying costs and attempts to find the order quantity that best balances those costs. JIT does not accept either setup costs or carrying costs and pushes for zero inventory levels. 
D)  The traditional approach does not accept carrying costs or setup costs. JIT minimizes both setup and carrying costs by finding the best order quantity to balance these costs.

Question 14

A drummer is(are)

Accepted Answer

A)  the inventory needed to keep the constrained resource busy for a specified time interval. 
B)  the major binding constraint. 
C)  the minor binding constraint. 
D)  the actions taken to tie the rate at which materials are released into the plant (at the first operation) to the production rate of the constrained resource. 
A)  the inventory needed to keep the constrained resource busy for a specified time interval. 
B)  the major binding constraint. 
C)  the minor binding constraint. 
D)  the actions taken to tie the rate at which materials are released into the plant (at the first operation) to the production rate of the constrained resource.

Question 15

JIT reduces lead times to meet delivery dates by

Accepted Answer

A)  reducing setup times. 
B)  expediting delivery to customers. 
C)  having more inventory available. 
D)  working overtime to fill orders. 
A)  reducing setup times. 
B)  expediting delivery to customers. 
C)  having more inventory available. 
D)  working overtime to fill orders.

Question 16

Southwestern Supply Company has an economic order quantity for item A of 200 units. The annual demand for the product is 5,000 units, and the cost of placing an order is $8. The carrying cost per unit is

Accepted Answer

A)  $6.00. 
B)  $2.00. 
C)  $4.00. 
D)  $141.00. 
A)  $6.00. 
B)  $2.00. 
C)  $4.00. 
D)  $141.00.

Question 17

Which of the following equations determines the total annual ordering costs?

Accepted Answer

A)  Cost of placing an order times the order quantity. 
B)  Cost of placing an order times the number of orders per year. 
C)  Cost of placing an order times one-half of the order quantity. 
D)  Unit carrying costs per year times the order quantity. 
A)  Cost of placing an order times the order quantity. 
B)  Cost of placing an order times the number of orders per year. 
C)  Cost of placing an order times one-half of the order quantity. 
D)  Unit carrying costs per year times the order quantity.

Question 18

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items:
  Refer to Figure 20-2. The reorder point for the inventory item is

Accepted Answer

A)  275 units. 
B)  375 units. 
C)  625 units. 
D)  1,525 units. 
A)  275 units. 
B)  375 units. 
C)  625 units. 
D)  1,525 units.

Question 19

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Accepted Answer

constraint

Question 20

Figure 20 - 1 Moriah's Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
Refer to Figure 20-1. The economic order quantity (rounded) is

Accepted Answer

A)  1,000 containers. 
B)  750 containers. 
C)  45 containers. 
D)  387 containers. 
A)  1,000 containers. 
B)  750 containers. 
C)  45 containers. 
D)  387 containers.

Just-in-case inventory management is a traditional inventory model based on a wait-until-needed demand.

Reducing ordering and setup costs interfere with the reduction of inventory costs.

The economic order quantity is the order quantity that results in

the process of continuous replacement of inventory has been made easier by the use of __________ interchanges.

One of the traditional reasons for holding inventory is to minimize total carrying costs and setup costs. The JIT solution is to

Inventory management identifies an economic order quantity that

JIT uses long-term contracts, continuous refilling, and electronic data interchanges to reduce or eliminate ordering costs.

The cost of acquiring inventory includes

Using the graphic approach to linear programming, the solution is usually

When comparing the traditional approach of inventory management to JIT, which of the following statements is true?

A drummer is(are)

JIT reduces lead times to meet delivery dates by

Southwestern Supply Company has an economic order quantity for item A of 200 units. The annual demand for the product is 5,000 units, and the cost of placing an order is $8. The carrying cost per unit is

Which of the following equations determines the total annual ordering costs?

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items: Refer to Figure 20-2. The reorder point for the inventory item is

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters

Exam 20: Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Just-in-case inventory management is a traditional inventory model based on a wait-until-needed demand.

Reducing ordering and setup costs interfere with the reduction of inventory costs.

The economic order quantity is the order quantity that results in

the process of continuous replacement of inventory has been made easier by the use of __________ interchanges.

One of the traditional reasons for holding inventory is to minimize total carrying costs and setup costs. The JIT solution is to

Inventory management identifies an economic order quantity that

JIT uses long-term contracts, continuous refilling, and electronic data interchanges to reduce or eliminate ordering costs.

The cost of acquiring inventory includes

Using the graphic approach to linear programming, the solution is usually

When comparing the traditional approach of inventory management to JIT, which of the following statements is true?

A drummer is(are)

JIT reduces lead times to meet delivery dates by

Southwestern Supply Company has an economic order quantity for item A of 200 units. The annual demand for the product is 5,000 units, and the cost of placing an order is $8. The carrying cost per unit is

Which of the following equations determines the total annual ordering costs?

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items: Refer to Figure 20-2. The reorder point for the inventory item is

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters