Question 1

A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week.What kind of system is this?

Accepted Answer

A) A periodic review system 
B) A continuous review system 
C) A service level system 
D) An ABC inventory system 
A) A periodic review system 
B) A continuous review system 
C) A service level system 
D) An ABC inventory system A

Question 2

ABC analysis requires that inventory be classified according to:

Accepted Answer

A) Alphabetical order by item name 
B) Annual dollar usage 
C) Activity-based costs 
D) Due date 
E) None of the above 
A) Alphabetical order by item name 
B) Annual dollar usage 
C) Activity-based costs 
D) Due date 
E) None of the above B

Question 3

The carrying cost consists of the following three cost components:

Accepted Answer

A) Capital cost,obsolescence cost,and ordering cost 
B) Obsolescence cost,capital cost,and stockout cost 
C) Obsolescence cost,storage cost,and capital cost 
D) Storage cost,handling cost,and obsolescence cost 
A) Capital cost,obsolescence cost,and ordering cost 
B) Obsolescence cost,capital cost,and stockout cost 
C) Obsolescence cost,storage cost,and capital cost 
D) Storage cost,handling cost,and obsolescence cost C

Question 4

Which of the following is NOT an assumption of the basic EOQ model?

Accepted Answer

A) Annual demand is constant and known. 
B) Lead-time is constant and known. 
C) No stockouts are allowed. 
D) Quantity discounts are available. 
E) The item is a single product; there is no interaction with other products. 
A) Annual demand is constant and known. 
B) Lead-time is constant and known. 
C) No stockouts are allowed. 
D) Quantity discounts are available. 
E) The item is a single product; there is no interaction with other products.

Question 5

The total cost per year for question 9,assuming no stockouts,is approximately equal to:

Accepted Answer

A) The total cost cannot be determined from the given information. 
B) $273.86 
C) $547.72 
D) $2,738.60 
E) $5,477.20 
A) The total cost cannot be determined from the given information. 
B) $273.86 
C) $547.72 
D) $2,738.60 
E) $5,477.20

Question 6

A decrease in an item's lead-time will increase the amount of safety stock required.

Accepted Answer

A) True 
 B)False

Question 7

According to ABC Classification,a periodic review system is employed to monitor the A items.

Accepted Answer

A) True 
 B)False

Question 8

In general,it is extremely hard to estimate the stockout costs and hence we use the desired service levels while computing the reorder points.

Accepted Answer

A) True 
 B)False

Question 9

The average inventory level is defined as the difference between the cycle stock and the safety stock components.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is incorrect about managing inventory in supply chains?

Accepted Answer

A) In a supply chain,a single firm typically controls all of the inventories that are required while manufacturing a product. 
B) Coordination among supply chain partners is essential while managing inventory across the supply chain. 
C) The total cost minimization approach can be applied while managing inventory across the supply chain. 
D) None of the above 
A) In a supply chain,a single firm typically controls all of the inventories that are required while manufacturing a product. 
B) Coordination among supply chain partners is essential while managing inventory across the supply chain. 
C) The total cost minimization approach can be applied while managing inventory across the supply chain. 
D) None of the above

Question 11

Dependent demand is subject to market forces and often exhibits a predictable demand pattern.

Accepted Answer

A) True 
 B)False

Question 12

Of the cost elements making up total inventory cost,which is the most difficult to estimate?

Accepted Answer

A) Stockout costs 
B) Holding costs 
C) Carrying costs 
D) Item cost 
A) Stockout costs 
B) Holding costs 
C) Carrying costs 
D) Item cost

Question 13

Which cost is classified under the cost of capital?

Accepted Answer

A) Item cost 
B) Storage cost 
C) Deterioration 
D) Opportunity cost of investment in inventory 
A) Item cost 
B) Storage cost 
C) Deterioration 
D) Opportunity cost of investment in inventory

Question 14

In the basic EOQ model,if the lead time doubles,the EOQ will:

Accepted Answer

A) Decrease by half 
B) Double 
C) Remain the same 
D) Increase,but not double 
E) None of the above 
A) Decrease by half 
B) Double 
C) Remain the same 
D) Increase,but not double 
E) None of the above

Question 15

Independent demand inventory consists of:

Accepted Answer

A) Inventory whose demand comes from independent suppliers 
B) Inventory that is independent of any known rules of demand and supply 
C) Demand that is related to the demand for another item 
D) Inventory whose demand is determined by market conditions outside the firm 
E) None of the above 
A) Inventory whose demand comes from independent suppliers 
B) Inventory that is independent of any known rules of demand and supply 
C) Demand that is related to the demand for another item 
D) Inventory whose demand is determined by market conditions outside the firm 
E) None of the above

Question 16

Which of the following is not a purpose of inventory?

Accepted Answer

A) To protect against uncertainties 
B) To uncouple phases of operations 
C) To provide for transit 
D) To decrease obsolescence 
A) To protect against uncertainties 
B) To uncouple phases of operations 
C) To provide for transit 
D) To decrease obsolescence

Question 17

A paint supplier that places orders for different colors of paint for delivery at the same time should use a:

Accepted Answer

A) P system 
B) Q system 
C) Dependent demand inventory model 
D) Quantity discount model 
E) None of the above 
A) P system 
B) Q system 
C) Dependent demand inventory model 
D) Quantity discount model 
E) None of the above

Question 18

In the basic EOQ model,if annual demand and carrying charge double,the effect on the EOQ is:

Accepted Answer

A) It doubles. 
B) It is half of its previous amount. 
C) It is about 70% of its previous amount. 
D) It remains the same. 
E) It increases by about 40%. 
A) It doubles. 
B) It is half of its previous amount. 
C) It is about 70% of its previous amount. 
D) It remains the same. 
E) It increases by about 40%.

Question 19

Which cost is not considered part of inventory ordering costs?

Accepted Answer

A) Transportation costs 
B) Obsolescence costs 
C) Setup costs 
D) Receiving costs 
A) Transportation costs 
B) Obsolescence costs 
C) Setup costs 
D) Receiving costs

Question 20

Transportation cost is an example of:

Accepted Answer

A) Item cost 
B) Ordering cost 
C) Carrying cost 
D) Stockout cost 
E) Storage cost 
A) Item cost 
B) Ordering cost 
C) Carrying cost 
D) Stockout cost 
E) Storage cost

A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week.What kind of system is this?

ABC analysis requires that inventory be classified according to:

The carrying cost consists of the following three cost components:

Which of the following is NOT an assumption of the basic EOQ model?

The total cost per year for question 9,assuming no stockouts,is approximately equal to:

A decrease in an item's lead-time will increase the amount of safety stock required.

According to ABC Classification,a periodic review system is employed to monitor the A items.

In general,it is extremely hard to estimate the stockout costs and hence we use the desired service levels while computing the reorder points.

The average inventory level is defined as the difference between the cycle stock and the safety stock components.

Which of the following statements is incorrect about managing inventory in supply chains?

Dependent demand is subject to market forces and often exhibits a predictable demand pattern.

Of the cost elements making up total inventory cost,which is the most difficult to estimate?

Which cost is classified under the cost of capital?

In the basic EOQ model,if the lead time doubles,the EOQ will:

Independent demand inventory consists of:

Which of the following is not a purpose of inventory?

A paint supplier that places orders for different colors of paint for delivery at the same time should use a:

In the basic EOQ model,if annual demand and carrying charge double,the effect on the EOQ is:

Which cost is not considered part of inventory ordering costs?

Transportation cost is an example of:

The Operations Function

Operations and Supply Chain Strategy

Product Design

Process Selection

Service Process Design

Process-Flow Analysis

Lean Thinking and Lean Systems

Managing Quality

Quality Control and Improvement

Supply Chain Management

Forecasting

Capacity Planning

Scheduling Operations

Project Planning and Scheduling

Materials Requirements Planning and ERP

Filters

Exam 15: Independent Demand Inventory

A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week.What kind of system is this?

ABC analysis requires that inventory be classified according to:

The carrying cost consists of the following three cost components:

Which of the following is NOT an assumption of the basic EOQ model?

The total cost per year for question 9,assuming no stockouts,is approximately equal to:

A decrease in an item's lead-time will increase the amount of safety stock required.

According to ABC Classification,a periodic review system is employed to monitor the A items.

In general,it is extremely hard to estimate the stockout costs and hence we use the desired service levels while computing the reorder points.

The average inventory level is defined as the difference between the cycle stock and the safety stock components.

Which of the following statements is incorrect about managing inventory in supply chains?

Dependent demand is subject to market forces and often exhibits a predictable demand pattern.

Of the cost elements making up total inventory cost,which is the most difficult to estimate?

Which cost is classified under the cost of capital?

In the basic EOQ model,if the lead time doubles,the EOQ will:

Independent demand inventory consists of:

Which of the following is not a purpose of inventory?

A paint supplier that places orders for different colors of paint for delivery at the same time should use a:

In the basic EOQ model,if annual demand and carrying charge double,the effect on the EOQ is:

Which cost is not considered part of inventory ordering costs?

Transportation cost is an example of:

The Operations Function

Operations and Supply Chain Strategy

Product Design

Process Selection

Service Process Design

Process-Flow Analysis

Lean Thinking and Lean Systems

Managing Quality

Quality Control and Improvement

Supply Chain Management

Forecasting

Capacity Planning

Scheduling Operations

Project Planning and Scheduling

Materials Requirements Planning and ERP

Filters