Question 1

Q is to ________ systems as P is to ________ systems.

Accepted Answer

A) fixed quantity,fixed period 
B) variable demand,constant demand 
C) variable lead time,variable demand 
D) variable quantity,variable period 
E) quality,price 
A) fixed quantity,fixed period 
B) variable demand,constant demand 
C) variable lead time,variable demand 
D) variable quantity,variable period 
E) quality,price A

Question 2

One function of inventory is to take advantage of quantity discounts.

Accepted Answer

A) True 
 B)False  True

Question 3

A product whose EOQ is 400 units experiences a 50% increase in demand.The new EOQ is:

Accepted Answer

A) unchanged. 
B) increased by less than 50%. 
C) increased by 50%. 
D) increased by more than 50%. 
E) cannot be determined 
A) unchanged. 
B) increased by less than 50%. 
C) increased by 50%. 
D) increased by more than 50%. 
E) cannot be determined B

Question 4

Several inventory models assume "independent demand." Explain what that term means and why the assumption is important.

Accepted Answer

Independent demand means that demand for

Question 5

What is a reorder point?

Accepted Answer

A reorder point is the invento

Question 6

A certain type of computer costs $1,000,and the annual holding cost is 25% of the value of the item.Annual demand is 10,000 units,and the order cost is $150 per order.What is the approximate economic order quantity?

Accepted Answer

A) 16 
B) 70 
C) 110 
D) 183 
E) 600 
A) 16 
B) 70 
C) 110 
D) 183 
E) 600

Question 7

Huckaby Motor Services,Inc.rebuilds small electrical items such as motors,alternators,and transformers,all using a certain type of copper wire.The firm's demand for this wire is approximately normal,averaging 20 spools per week,with a standard deviation of 6 spools per week.Cost per spool is $24;ordering costs are $25 per order;inventory handling cost is $4.00 per spool per year.Acquisition lead time is four weeks.The company works 50,5-day weeks per year.
a.What is the optimal size of an order,if minimization of inventory system cost is the objective?
b.What are the safety stock and reorder point if the desired service level is 90%?

Accepted Answer

Demand is 20 × 50 = 1000 spool

Question 8

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

Accepted Answer

warehouse

Question 9

Consider a local club selling Christmas trees.If demand is normal with a mean of 200 and a standard deviation of 50,how many trees should the club stock if service level must be greater than 95%?

Accepted Answer

The Z-value for a 95

Question 10

When demand is constant and lead time is variable,the safety stock computation requires three inputs: the value of Z,________,and the standard deviation of lead time.

Accepted Answer

The answer of When demand is constant and lead time...

Question 11

Demand for gallons of milk (a perishable item)is normally distributed with a weekly mean of 50 and standard deviation of 15.How many additional gallons of milk must be stocked to increase the service level from 50% to 80%?

Accepted Answer

Z for 50% is 0,Z for 80% is .8

Question 12

A product has a reorder point of 260 units,and is ordered ten times a year on average.The following table shows the historical distribution of demand values observed during lead time.
   Currently,stockouts are valued at $5 per unit per occurrence,while inventory carrying costs are $2 per unit per year.Should the firm add safety stock? If so,how much safety stock should be added?

Accepted Answer

@#IMG-DLM& The current policy is not the

Question 13

Given the following data: D=65,000 units per year,S = $120 per setup,P = $5 per unit,and I = 25% per year, (a)calculate the EOQ,and (b)calculate annual costs of holding and setup following EOQ behavior.

Accepted Answer

(a)Q* = @#IMG-DLM& = 3532.7 un

Question 14

In the simple EOQ model,if annual demand were to increase,the EOQ would increase proportionately.

Accepted Answer

A) True 
 B)False

Question 15

________ is the complement of the probability of a stockout.

Accepted Answer

The answer of ________ is the complement of the probability...

Question 16

Define shrinkage.Identify three or more examples of shrinkage.

Accepted Answer

Shrinkage is retail inventory

Question 17

Daily demand for a product is normally distributed with a mean of 150 units and a standard deviation of 15 units.The firm currently uses a reorder point system,and it seeks a 75% service level during the lead time of 6 days.
a.What safety stock is appropriate for the firm?
b.What is the reorder point?

Accepted Answer

a.SS = 0.67 × 15 × @#IMG-DLM&

Question 18

Consider a product with a daily demand of 400 units,a setup cost per production run of $100,a monthly holding cost per unit of $2.00,and an annual production rate of 292,000 units.The firm operates and experiences demand 365 days per year.Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model.How much money per year has that mistake cost the company?

Accepted Answer

d = 400 units
D = 400(365)= 146,000 unit

Question 19

The main trait of a single-period model is that:

Accepted Answer

A) inventory has limited value after a certain period of time. 
B) it has the largest EOQ sizes. 
C) the order quantity should usually equal the expected value of demand. 
D) supply is limited. 
E) the cost of a shortage cannot be determined accurately. 
A) inventory has limited value after a certain period of time. 
B) it has the largest EOQ sizes. 
C) the order quantity should usually equal the expected value of demand. 
D) supply is limited. 
E) the cost of a shortage cannot be determined accurately.

Question 20

Which of the following statements regarding the production order quantity model is TRUE?

Accepted Answer

A) It applies only to items produced in the firm's own production departments. 
B) It relaxes the assumption that all the order quantity is received at one time. 
C) It relaxes the assumption that the demand rate is constant. 
D) It minimizes the total production costs. 
E) It minimizes inventory. 
A) It applies only to items produced in the firm's own production departments. 
B) It relaxes the assumption that all the order quantity is received at one time. 
C) It relaxes the assumption that the demand rate is constant. 
D) It minimizes the total production costs. 
E) It minimizes inventory.

Exam 12: Managing Inventory

Q is to ________ systems as P is to ________ systems.

One function of inventory is to take advantage of quantity discounts.

A product whose EOQ is 400 units experiences a 50% increase in demand.The new EOQ is:

Several inventory models assume "independent demand." Explain what that term means and why the assumption is important.

What is a reorder point?

A certain type of computer costs $1,000,and the annual holding cost is 25% of the value of the item.Annual demand is 10,000 units,and the order cost is $150 per order.What is the approximate economic order quantity?

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

Consider a local club selling Christmas trees.If demand is normal with a mean of 200 and a standard deviation of 50,how many trees should the club stock if service level must be greater than 95%?

When demand is constant and lead time is variable,the safety stock computation requires three inputs: the value of Z,________,and the standard deviation of lead time.

Demand for gallons of milk (a perishable item)is normally distributed with a weekly mean of 50 and standard deviation of 15.How many additional gallons of milk must be stocked to increase the service level from 50% to 80%?

Given the following data: D=65,000 units per year,S = $120 per setup,P = $5 per unit,and I = 25% per year, (a)calculate the EOQ,and (b)calculate annual costs of holding and setup following EOQ behavior.

In the simple EOQ model,if annual demand were to increase,the EOQ would increase proportionately.

________ is the complement of the probability of a stockout.

Define shrinkage.Identify three or more examples of shrinkage.

The main trait of a single-period model is that:

Which of the following statements regarding the production order quantity model is TRUE?

Operations and Productivity

The Global Environment and Operations Strategy

Managing Projects

Forecasting Demand

Product Design

Quality Management and International Standards

Process Design

Location Decisions

Layout Decisions

Job Design and Work Measurement

Supply Chain Management

Aggregate Scheduling

Material Requirements Planning Mrpand Erp

Scheduling for the Short-Term

Jit,lean Operations,and the Toyota Production System

Maintenance and Reliability Decisions

Sustainability

Statistical Process Control

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Supply Chain Modeling

Decision Modeling

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Learning Curves

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Q is to systems as P is to systems.