Question 1

Which of the following equations determines the total annual carrying costs when no safety stock is kept?

Accepted Answer

A)  Cost of placing an order × Order quantity 
B)  Cost of placing an order × Number of orders per year 
C)  Cost of placing an order × One-half of the order quantity 
D)  Unit carrying costs per year × One-half of the order quantity 
A)  Cost of placing an order × Order quantity 
B)  Cost of placing an order × Number of orders per year 
C)  Cost of placing an order × One-half of the order quantity 
D)  Unit carrying costs per year × One-half of the order quantity

Question 2

When a product mix does not utilize fully its constraints, they are called loose constraints, when used completely, they are called binding constraints.

Accepted Answer

A) True 
 B)False

Question 3

Figure 20 - 1
Moriah's Candle Company manufactures candles. The company buys wax in 45­Kilogram 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 and the average rate of usage is 60 containers per day. What is the reorder point?

Accepted Answer

A)  240 containers 
B)  260 containers 
C)  220 containers 
D)  200 containers 
A)  240 containers 
B)  260 containers 
C)  220 containers 
D)  200 containers

Question 4

Comfy Wheels 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 $35. The cost of carrying seats in inventory is $6 per seat per year. The company produces 90,000 buses per year. Total carrying costs (rounded to the nearest dollar) associated with the economic order quantity are

Accepted Answer

A)  $3,075. 
B)  $3,750. 
C)  $502. 
D)  $328. 
A)  $3,075. 
B)  $3,750. 
C)  $502. 
D)  $328.

Question 5

The theory of constraints focuses on each of the following measures of organizational performance EXCEPT

Accepted Answer

A)  revenues. 
B)  throughput. 
C)  operating expenses. 
D)  inventory. 
A)  revenues. 
B)  throughput. 
C)  operating expenses. 
D)  inventory.

Question 6

Hasselblad Company manufactures two different products, X and Y. The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows:
  What is the equation for the constraint on materials?

Accepted Answer

A)  5X + 6Y ≤ 300 
B)  4X + 3Y ≤ 100 
C)  5X + 6Y ≤ 100 
D)  2X + 3Y ≤ 100 
A)  5X + 6Y ≤ 300 
B)  4X + 3Y ≤ 100 
C)  5X + 6Y ≤ 100 
D)  2X + 3Y ≤ 100

Question 7

Which of the following elements could be determined by using the economic order quantity formula?

Accepted Answer

A)  the optimum size of production run 
B)  reorder point 
C)  safety stock 
D)  annual demand 
A)  the optimum size of production run 
B)  reorder point 
C)  safety stock 
D)  annual demand

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  1,500 units. 
B)  364 units. 
C)  140 units. 
D)  725 units. 
A)  1,500 units. 
B)  364 units. 
C)  140 units. 
D)  725 units.

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

Magnitude 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:
Product A Product B
Labor hours per unit 5 2
Machine hours per unit 1 4
What is the constraint on machine hours for Magnitude Company?

Accepted Answer

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

Question 12

The model which expresses a constrained optimization problem as a linear objective function is called the
__________ model.

Accepted Answer

The answer of The model which expresses a constrained optimization...

Question 13

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 14

The focus on the goal of making money now and in the future by managing constraints is called the .

Accepted Answer

theory of

Question 15

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure. 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 16

Olga 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. What is the cost of placing an order?

Accepted Answer

A)  $25 
B)  $8 
C)  $200 
D)  $2 
A)  $25 
B)  $8 
C)  $200 
D)  $2

Question 17

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 18

Which of the following is NOT an opportunity cost associated with inventory management?

Accepted Answer

A)  lost sales to customers 
B)  use of capital tied up in inventory investment 
C)  cost of expediting 
D)  all are opportunity costs 
A)  lost sales to customers 
B)  use of capital tied up in inventory investment 
C)  cost of expediting 
D)  all are opportunity costs

Question 19

Comfy Wheels 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 $35. The cost of carrying seats in inventory is $6 per seat per year. The company produces 90,000 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)  933 seats. 
B)  2,050 seats. 
C)  1,025 seats. 
D)  513 seats. 
A)  933 seats. 
B)  2,050 seats. 
C)  1,025 seats. 
D)  513 seats.

Question 20

JIT inventory management offers alternative solutions that require higher inventories.

Accepted Answer

A) True 
 B)False

Which of the following equations determines the total annual carrying costs when no safety stock is kept?

When a product mix does not utilize fully its constraints, they are called loose constraints, when used completely, they are called binding constraints.

The theory of constraints focuses on each of the following measures of organizational performance EXCEPT

Hasselblad Company manufactures two different products, X and Y. The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: What is the equation for the constraint on materials?

Which of the following elements could be determined by using the economic order quantity formula?

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

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

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

The model which expresses a constrained optimization problem as a linear objective function is called the __________ model.

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

The focus on the goal of making money now and in the future by managing constraints is called the .

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure. The JIT solution is to

Olga 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. What is the cost of placing an order?

Inventory management identifies an economic order quantity that

Which of the following is NOT an opportunity cost associated with inventory management?

JIT inventory management offers alternative solutions that require higher inventories.

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

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

Which of the following equations determines the total annual carrying costs when no safety stock is kept?

When a product mix does not utilize fully its constraints, they are called loose constraints, when used completely, they are called binding constraints.

The theory of constraints focuses on each of the following measures of organizational performance EXCEPT

Hasselblad Company manufactures two different products, X and Y. The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows: What is the equation for the constraint on materials?

Which of the following elements could be determined by using the economic order quantity formula?

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

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

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

The model which expresses a constrained optimization problem as a linear objective function is called the __________ model.

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

The focus on the goal of making money now and in the future by managing constraints is called the .

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure. The JIT solution is to

Olga 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. What is the cost of placing an order?

Inventory management identifies an economic order quantity that

Which of the following is NOT an opportunity cost associated with inventory management?

JIT inventory management offers alternative solutions that require higher inventories.

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