Question 1

In the economic order quantity equation, the numerator under the square root includes

Accepted Answer

A)  annual demand and cost of placing an order. 
B)  annual demand and unit carrying cost. 
C)  unit carrying cost and cost of placing an order. 
D)  order quantity and cost of placing an order. 
A)  annual demand and cost of placing an order. 
B)  annual demand and unit carrying cost. 
C)  unit carrying cost and cost of placing an order. 
D)  order quantity and cost of placing an order.

Question 2

American 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.If the company operates 200 days a year and the lead time for the item is five days, what is the reorder point if a safety stock of 50 units is maintained?

Accepted Answer

A)  4 days 
B)  175 units 
C)  25 units 
D)  50 units 
A)  4 days 
B)  175 units 
C)  25 units 
D)  50 units

Question 3

A marker or card that specifies the quantity that the preceding process should manufacture is a

Accepted Answer

A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban. 
A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban.

Question 4

A linear programming problem has an objective function of 10X + 12Y.If the optimal solution provided by the model is to produce and sell 400 units of X and 1,000 units of Y, the expected return is

Accepted Answer

A)  $1,400. 
B)  $40,800. 
C)  $14,800. 
D)  $16,000. 
A)  $1,400. 
B)  $40,800. 
C)  $14,800. 
D)  $16,000.

Question 5

Which of the following is NOT a step in the methodology for improving performance under the theory of constraints?

Accepted Answer

A)  exploit the binding constraints 
B)  subordinate everything else to the decisions made to exploit binding constraints 
C)  elevate the organization's binding constraints 
D)  analyze the product mix 
A)  exploit the binding constraints 
B)  subordinate everything else to the decisions made to exploit binding constraints 
C)  elevate the organization's binding constraints 
D)  analyze the product mix

Question 6

Which of the following is NOT considered a carrying cost?

Accepted Answer

A)  insurance on the inventory 
B)  the opportunity cost of funds invested in inventory 
C)  storage costs 
D)  receiving costs 
A)  insurance on the inventory 
B)  the opportunity cost of funds invested in inventory 
C)  storage costs 
D)  receiving costs

Question 7

Air Frame Corporation increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total annual ordering costs?

Accepted Answer

A)  increase 
B)  no change 
C)  decrease 
D)  cannot be determined 
A)  increase 
B)  no change 
C)  decrease 
D)  cannot be determined

Question 8

Margaret Company has an economic order quantity for item B of 100 units.The annual demand for the product is 1,400 units, and the unit carrying cost per year is $7.The company operates 200 days a year, the lead time for the item is ten days, and the safety stock is 100 units. What is the reorder point?

Accepted Answer

A)  70 units 
B)  170 units 
C)  1000 units 
D)  100 units 
A)  70 units 
B)  170 units 
C)  1000 units 
D)  100 units

Question 9

The following information is available for Walters Furniture Company, which sells two products:   
-There are 200 hours available in the plant and 200 square feet of metal available per operating period.
What is the objective function for maximizing sales?

Accepted Answer

A)  Maximize 200X + 100Y 
B)  Maximize 180X + 90Y 
C)  Maximize 50X + 40Y 
D)  Minimize 200X + 100Y 
A)  Maximize 200X + 100Y 
B)  Maximize 180X + 90Y 
C)  Maximize 50X + 40Y 
D)  Minimize 200X + 100Y

Question 10

Which of the following is NOT an example of an ordering cost?

Accepted Answer

A)  receiving costs 
B)  salespeople's salaries costs 
C)  clerical costs of preparing documents 
D)  insurance costs on shipment 
A)  receiving costs 
B)  salespeople's salaries costs 
C)  clerical costs of preparing documents 
D)  insurance costs on shipment

Question 11

Heft 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:
  What is the constraint on machine hours for Heft Company?

Accepted Answer

A)  1A + 4B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500 
A)  1A + 4B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500

Question 12

Figure 20-4 Heft 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 objective function to maximize profits for Heft Company?

Accepted Answer

A)  Minimize 5A + 2B 
B)  Maximize 1A + 4B 
C)  Maximize 40A + 30B 
D)  Minimize 40A + 30B 
A)  Minimize 5A + 2B 
B)  Maximize 1A + 4B 
C)  Maximize 40A + 30B 
D)  Minimize 40A + 30B

Question 13

Figure 20 - 1 Jan's Candle Company manufactures candles.The company buys wax in 100-pound containers that cost $15 each.The company uses 20,000 containers per year, and usage occurs evenly throughout the year.The average cost to carry a 100-pound container in inventory per year is $2, and the cost to place an order is $10.The company works 250 days per year.
-
Refer to Figure 20-1.The lead time is four working days and the average rate of usage is 80 containers per day.What is the reorder point?

Accepted Answer

A)  340 containers 
B)  320 containers 
C)  300 containers 
D)  280 containers 
A)  340 containers 
B)  320 containers 
C)  300 containers 
D)  280 containers

Question 14

Big Bus Company produces buses.In order to produce the seats for the buses, special equipment must be set up.The setup cost per frame is $40.The cost of carrying seats in inventory is $5 per seat per year.The company produces 100,000 buses per year. The number of seats that should be produced per setup in order to minimize the total setup and carrying costs is

Accepted Answer

A)  2,828 seats. 
B)  1,265 seats. 
C)  894 seats. 
D)  566 seats. 
A)  2,828 seats. 
B)  1,265 seats. 
C)  894 seats. 
D)  566 seats.

Question 15

Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

Accepted Answer

A)  increase 
B)  no change 
C)  decrease 
D)  cannot be determined 
A)  increase 
B)  no change 
C)  decrease 
D)  cannot be determined

Question 16

Figure 20-4 Heft 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 Heft Company?

Accepted Answer

A)  1A + 4B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500 
A)  1A + 4B £ 500 
B)  5A + 2B £ 500 
C)  1A + 4B £ 300 
D)  40A + 30B £ 500

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

Which of the following costs are considered in the EOQ model?

Accepted Answer

A)  ordering costs 
B)  selling costs 
C)  carrying costs 
D)  both a and c 
A)  ordering costs 
B)  selling costs 
C)  carrying costs 
D)  both a and c

Question 19

Which of the following is NOT a common reason for shutdowns?

Accepted Answer

A)  safety stock of inventory 
B)  defective materials or subassemblies 
C)  machine failure 
D)  unavailability of a material of subassembly 
A)  safety stock of inventory 
B)  defective materials or subassemblies 
C)  machine failure 
D)  unavailability of a material of subassembly

Question 20

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.

In the economic order quantity equation, the numerator under the square root includes

A marker or card that specifies the quantity that the preceding process should manufacture is a

A linear programming problem has an objective function of 10X + 12Y.If the optimal solution provided by the model is to produce and sell 400 units of X and 1,000 units of Y, the expected return is

Which of the following is NOT a step in the methodology for improving performance under the theory of constraints?

Which of the following is NOT considered a carrying cost?

Air Frame Corporation increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total annual ordering costs?

The following information is available for Walters Furniture Company, which sells two products: -There are 200 hours available in the plant and 200 square feet of metal available per operating period. What is the objective function for maximizing sales?

Which of the following is NOT an example of an ordering cost?

Heft 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: What is the constraint on machine hours for Heft Company?

Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

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

Which of the following costs are considered in the EOQ model?

Which of the following is NOT a common reason for shutdowns?

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

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

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

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

In the economic order quantity equation, the numerator under the square root includes

A marker or card that specifies the quantity that the preceding process should manufacture is a

A linear programming problem has an objective function of 10X + 12Y.If the optimal solution provided by the model is to produce and sell 400 units of X and 1,000 units of Y, the expected return is

Which of the following is NOT a step in the methodology for improving performance under the theory of constraints?

Which of the following is NOT considered a carrying cost?

Air Frame Corporation increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total annual ordering costs?

The following information is available for Walters Furniture Company, which sells two products: -There are 200 hours available in the plant and 200 square feet of metal available per operating period. What is the objective function for maximizing sales?

Which of the following is NOT an example of an ordering cost?

Heft 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: What is the constraint on machine hours for Heft Company?

Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

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

Which of the following costs are considered in the EOQ model?

Which of the following is NOT a common reason for shutdowns?

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

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

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