Question 1

Describe the impact of trade promotions on cycle inventory.

Accepted Answer

Manufacturers use trade promotions to of

Question 2

Scenario 11.4 - The Gutter
A rodent infestation has left a landlord with a major cleanup job;in fact,the cleanup will consist of ripping out all the walls and ceilings of an 1860 square foot house to replace them.A trip to the local home improvement store reveals that 4'x8' sheets of drywall have three price points as indicated in the table.Another consideration for the landlord is that he is equipped with only a humble half-ton pickup truck,that can hold at most 20 sheets.His truck sips fuel,so he considers only wear and tear on his vehicle at $5 to haul all the sheets he will use for the job.The holding percentage is 20%.The landlord believes the entire job - all walls and ceiling - will require 10,080 square feet of drywall.
 $$\begin{array} { | l | c | } 
\hline{ \text { Purchase Quantity } } & \text { Price Per Sheet } \
\hline 1 - 20 & \$ 9.40 \
\hline 21 - 100 & \$ 9.30 \
\hline 101 \text { or more } & \$ 9.20 \
\hline
\end{array}$$
-Use the information in Scenario 11.4 to determine the best number of sheets to purchase at a time.(Assume he can buy only an integer-multiple of sheets. )

Accepted Answer

A) 101 
B) 41 
C) 21 
D) 20 
A) 101 
B) 41 
C) 21 
D) 20

Question 3

Average flow time resulting from cycle inventory is equal to

Accepted Answer

A) Cycle Inventory/Demand = Q/2. 
B) Cycle Inventory/Demand = Q/2D. 
C) Cycle Inventory = Q/2. 
D) Cycle Inventory = Lot Size = Q. 
A) Cycle Inventory/Demand = Q/2. 
B) Cycle Inventory/Demand = Q/2D. 
C) Cycle Inventory = Q/2. 
D) Cycle Inventory = Lot Size = Q.

Question 4

In the pricing schedule for marginal unit quantity discounts,

Accepted Answer

A) the average cost of a unit decreases at a breakpoint. 
B) the average cost of a unit increases at a breakpoint. 
C) the marginal cost of a unit decreases at a breakpoint. 
D) the marginal cost of a unit increases at a breakpoint. 
A) the average cost of a unit decreases at a breakpoint. 
B) the average cost of a unit increases at a breakpoint. 
C) the marginal cost of a unit decreases at a breakpoint. 
D) the marginal cost of a unit increases at a breakpoint.

Question 5

A price discount where the pricing schedule offers discounts based on the quantity ordered in a single lot is

Accepted Answer

A) customer based. 
B) lot size based. 
C) supplier based. 
D) volume based. 
A) customer based. 
B) lot size based. 
C) supplier based. 
D) volume based.

Question 6

Price discrimination is the practice where a firm charges differential prices to maximize profits.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 11.2 - S&H Mercantile
The S&H Mercantile in Luther is the only game in town for a number of items,and tries valiantly to use only the storage space needed to display items since there is no stock room in the back of the store.One popular item,a 16-ounce can of dehydrated water,takes up 20 square inches of shelf space.The shelf space available for this item measures five feet by four feet.The store manager would like to order a quantity that can fill the shelf space without stacking and without needing to store cans elsewhere in the store.The amount ordered should all be on display once the S&H runs out and ideally would arrive just as the last can is purchased.
-Aggregating across products,retailers,or suppliers in a single order allows for

Accepted Answer

A) an increase in lot size for individual products. 
B) an increase in customer demand. 
C) a reduction in holding cost per unit. 
D) a reduction in lot size for individual products. 
A) an increase in lot size for individual products. 
B) an increase in customer demand. 
C) a reduction in holding cost per unit. 
D) a reduction in lot size for individual products.

Question 8

The primary role of cycle inventory is to allow different stages in the supply chain to

Accepted Answer

A) purchase product in lot sizes that maximize the sum of the material,ordering,and holding cost. 
B) purchase product in lot sizes that minimize the sum of the material,ordering,and holding cost. 
C) sell product in lot sizes that maximize the sum of the material,ordering,and holding cost. 
D) sell product in lot sizes that minimize the sum of the material,ordering,and holding cost. 
A) purchase product in lot sizes that maximize the sum of the material,ordering,and holding cost. 
B) purchase product in lot sizes that minimize the sum of the material,ordering,and holding cost. 
C) sell product in lot sizes that maximize the sum of the material,ordering,and holding cost. 
D) sell product in lot sizes that minimize the sum of the material,ordering,and holding cost.

Question 9

Which of these managerial levers should be used to reduce large lots associated with the fixed cost of transportation?

Accepted Answer

A) Reducing changeover times 
B) Facilitating the aggregation of shipments 
C) Deployment of suitable technology 
D) Reducing supplier fixed costs 
A) Reducing changeover times 
B) Facilitating the aggregation of shipments 
C) Deployment of suitable technology 
D) Reducing supplier fixed costs

Question 10

A key to reducing cycle inventory is the reduction of lot size.

Accepted Answer

A) True 
 B)False

Question 11

Economies of scale in purchasing and ordering motivate a manager to

Accepted Answer

A) increase the lot size and cycle inventory. 
B) decrease the lot size and cycle inventory. 
C) eliminate inventory. 
D) increase the lot size and reduce cycle inventory. 
A) increase the lot size and cycle inventory. 
B) decrease the lot size and cycle inventory. 
C) eliminate inventory. 
D) increase the lot size and reduce cycle inventory.

Question 12

Marginal unit quantity discounts have also been referred to as multi-block tariffs.

Accepted Answer

A) True 
 B)False

Question 13

The XYZ Company has an assembly plant in Cincinnati and its parts plant in Indianapolis.Parts are transported from Indianapolis to Cincinnati using trucks.Each shipment costs $100.The Cincinnati plant assembles and sells 300 finished products each day and operates 5 days a week and 50 weeks a year.Part #456 costs $50 and XYZ Company incurs a holding cost of 20 percent per year.How many of part #456 should XYZ Company put in each shipment? What is the cycle inventory of part #456 at XYZ Company?

Accepted Answer

Q* =
 @#LAT-DLM& =
 @#LAT-DLM& = 1224.74

Question 14

Cycle inventory is primarily held to

Accepted Answer

A) take advantage of diseconomies of scale and increase cost within the supply chain. 
B) take advantage of diseconomies of scale and reduce cost within the supply chain. 
C) take advantage of economies of scale and increase cost within the supply chain. 
D) take advantage of economies of scale and reduce cost within the supply chain. 
A) take advantage of diseconomies of scale and increase cost within the supply chain. 
B) take advantage of diseconomies of scale and reduce cost within the supply chain. 
C) take advantage of economies of scale and increase cost within the supply chain. 
D) take advantage of economies of scale and reduce cost within the supply chain.

Question 15

Scenario 11.1 - Bubble and Squeak
The rising popularity of bubble and squeak as a breakfast item on the menu has resulted in a steady demand for peas.Over the course of the past week,457 patrons have ordered the hearty breakfast and each serving contains a half cup of English peas.It costs two cents to hold a half cup of peas in inventory for a year and $3 to place an order (remember they come all the way from England!).It takes two weeks to ship a container from England loaded with peas.
-If demand increases by a factor of k,the optimal lot size increases by a factor of

Accepted Answer

A) k. 
B) k/2. 
C) k-squared. 
D) the square root of k. 
A) k. 
B) k/2. 
C) k-squared. 
D) the square root of k.

Question 16

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

Accepted Answer

A) exploit economies of scale and raise cost. 
B) exploit economies of scale and lower cost. 
C) exploit customers and lower cost. 
D) exploit customers and raise cost. 
A) exploit economies of scale and raise cost. 
B) exploit economies of scale and lower cost. 
C) exploit customers and lower cost. 
D) exploit customers and raise cost.

Question 17

Scenario 11.1 - Bubble and Squeak
The rising popularity of bubble and squeak as a breakfast item on the menu has resulted in a steady demand for peas.Over the course of the past week,457 patrons have ordered the hearty breakfast and each serving contains a half cup of English peas.It costs two cents to hold a half cup of peas in inventory for a year and $3 to place an order (remember they come all the way from England!).It takes two weeks to ship a container from England loaded with peas.
-How many orders per year does the diner place if they order at the economic order quantity?

Accepted Answer

A) 18 
B) 9 
C) 5 
D) 14 
A) 18 
B) 9 
C) 5 
D) 14

Question 18

Pricing schedules with all unit quantity discounts encourage retailers to increase the size of their lots,which reduces the average inventory and flow time in a supply chain.

Accepted Answer

A) True 
 B)False

Question 19

A graphical plot depicting the level of inventory over time is

Accepted Answer

A) an inventory graph. 
B) a distribution inventory. 
C) an inventory drawing. 
D) an inventory profile. 
A) an inventory graph. 
B) a distribution inventory. 
C) an inventory drawing. 
D) an inventory profile.

Question 20

Scenario 11.2 - S&H Mercantile
The S&H Mercantile in Luther is the only game in town for a number of items,and tries valiantly to use only the storage space needed to display items since there is no stock room in the back of the store.One popular item,a 16-ounce can of dehydrated water,takes up 20 square inches of shelf space.The shelf space available for this item measures five feet by four feet.The store manager would like to order a quantity that can fill the shelf space without stacking and without needing to store cans elsewhere in the store.The amount ordered should all be on display once the S&H runs out and ideally would arrive just as the last can is purchased.
-Drought conditions spike demand during the summer to an annualized rate of 27,000 cans per year and the price rises to $12 per can with a holding cost of 20%.What is the required order cost per lot?

Accepted Answer

A) 9.2 cents 
B) 92 cents 
C) $9.20 
D) $92.00 
A) 9.2 cents 
B) 92 cents 
C) $9.20 
D) $92.00

Describe the impact of trade promotions on cycle inventory.

Average flow time resulting from cycle inventory is equal to

In the pricing schedule for marginal unit quantity discounts,

A price discount where the pricing schedule offers discounts based on the quantity ordered in a single lot is

Price discrimination is the practice where a firm charges differential prices to maximize profits.

The primary role of cycle inventory is to allow different stages in the supply chain to

Which of these managerial levers should be used to reduce large lots associated with the fixed cost of transportation?

A key to reducing cycle inventory is the reduction of lot size.

Economies of scale in purchasing and ordering motivate a manager to

Marginal unit quantity discounts have also been referred to as multi-block tariffs.

Cycle inventory is primarily held to

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

Pricing schedules with all unit quantity discounts encourage retailers to increase the size of their lots,which reduces the average inventory and flow time in a supply chain.

A graphical plot depicting the level of inventory over time is

Understanding the Supply Chain

Achieving Strategic Fit in a Supply Chain

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand

Coordination in a Supply Chain

Managing Uncertainty in a Supply Chain: Safety Inventory

Linking Product Availability to Profits

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Pricing and Revenue Management in a Supply Chain

Sustainability and the Supply Chain

Filters

Exam 11: Managing Economies of Scale in a Supply Chain: Cycle Inventory

Describe the impact of trade promotions on cycle inventory.

Average flow time resulting from cycle inventory is equal to

In the pricing schedule for marginal unit quantity discounts,

A price discount where the pricing schedule offers discounts based on the quantity ordered in a single lot is

Price discrimination is the practice where a firm charges differential prices to maximize profits.

The primary role of cycle inventory is to allow different stages in the supply chain to

Which of these managerial levers should be used to reduce large lots associated with the fixed cost of transportation?

A key to reducing cycle inventory is the reduction of lot size.

Economies of scale in purchasing and ordering motivate a manager to

Marginal unit quantity discounts have also been referred to as multi-block tariffs.

Cycle inventory is primarily held to

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

Pricing schedules with all unit quantity discounts encourage retailers to increase the size of their lots,which reduces the average inventory and flow time in a supply chain.

A graphical plot depicting the level of inventory over time is

Understanding the Supply Chain

Achieving Strategic Fit in a Supply Chain

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand

Coordination in a Supply Chain

Managing Uncertainty in a Supply Chain: Safety Inventory

Linking Product Availability to Profits

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Pricing and Revenue Management in a Supply Chain

Sustainability and the Supply Chain

Filters