Deck 18: Inventory Management

Question 1

A store has annual average daily demand rate of 16 units with a standard deviation of 2 units,and the time between orders is 90 days and the lead time for it to receive an order from its supplier is 20 days,if the supplier visits the store and there are 6 units of inventory in stock,the store's safety stock for a 95% service level is approximately

A)36.2
B)43.8
C)16.2
D)28.6

Answer 1

D

Question 2

The primary enabler for effective supply chain management is

A)inventory
B)forecasting
C)quality
D)information technology

Answer 2

D

Question 3

If a company has an ordering cost of $250,a carrying cost of $4 per unit,annual product demand of 6,000 units,and its production rate is 100 units per day,the optimal order quantity is approximately

A)866
B)756
C)945
D)1,027

Answer 3

C

Question 4

If a company has an ordering cost of $250,a carrying cost of $4 per unit,and annual product demand of 6,000 units,the optimal order quantity is approximately

A)923
B)866
C)751
D)1,027

Question 5

An inventory system in which the inventory stock is replenished by a fixed amount whenever the inventory on hand decreases to a predetermined level is a

A)periodic system
B)continuous system
C)ABC system
D)fixed-time-period system

Question 6

A store has an ordering cost of $250,a carrying cost of $4 per unit,annual product demand of 6,000 units,and it purchases product from a supplier for $500 per unit,however,the supplier has offered the store a discount price of $400 if it will purchase 1,200 units;the store's optimal order quantity is

A)866
B)1,200
C)756
D)945

Question 7

If a store has annual average daily demand of 16 units with a standard deviation of 2 units,and the lead time for it to receive an order from its supplier is 20 days,the store's reorder point for a 95% service level is approximately

A)326.1 units
B)334.8 units
C)348.2 units
D)356.6 units

Question 8

In an EOQ model the optimal order quantity occurs where

A)the slope of the total cost curve equals zero
B)ordering cost equals carrying cost
C)the differential of the total cost curve with respect to the order size equals zero
D)all of the above

Question 9

If a store has annual demand 365 days per year)of 6,000 units and the lead time for it to receive an order from its supplier is 20 days,its EOQ reorder point is approximately

A)300 units
B)329 units
C)428 units
D)600 units

Question 10

If a company has an ordering cost of $250,a carrying cost of $4 per unit,and annual product demand of 6,000 units,the total minimum inventory cost is approximately

A)$3,464
B)$3,250
C)$3,944
D)$2,921

Question 11

A method for classifying inventory according to its dollar value is a

A)periodic system
B)continuous system
C)ABC system
D)perpetual system

Question 12

In a periodic inventory system

A)time between orders is constant and order size varies
B)time between orders varies and order size is constant
C)time between orders varies and order size varies
D)time between orders is constant and order size is constant
Difficult: easy

Question 13

If a store has annual average daily demand of 16 units with a standard deviation of 2 units,and the lead time for it to receive an order from its supplier is 20 days,the store's safety stock for a 95% service level is approximately

A)14.8 units
B)10.4 units
C)17.5 units
D)26.1 units

Question 14

If a company has an ordering cost of $250,a carrying cost of $4 per unit,annual product demand of 6,000 units,and its production rate is 100 units per day,the total minimum inventory cost is approximately

A)$3,464
B)$2,921
C)$3,944
D)$3,175

Question 15

A store has an ordering cost of $250,a carrying cost of $4 per unit,annual product demand of 6,000 units,and it purchases product from a supplier for $500 per unit,however,the supplier has offered the store a discount price of $400 if it will purchase 1,200 units;the store's minimum total inventory cost is

A)$2,407,300
B)$3,607,200
C)$3,464,000
D)$2,987,400

Question 16

An example of a dependent demand item is a

A)car
B)house
C)shipping container
D)paint

Question 17

An inventory system in which the inventory on hand is counted at set times on a continual basis and an order is placed to return the inventory stock to a desired level is a

A)periodic system
B)continuous system
C)ABC system
D)perpetual system

Question 18

A store has annual average daily demand rate of 16 units with a standard deviation of 2 units,and the time between orders is 90 days and the lead time for it to receive an order from its supplier is 20 days,if the supplier visits the store and there are 6 units of inventory in stock,the store's order size for a 95% service level is approximately

A)3,268.6 units
B)1,488.6 units
C)1,788.6 units
D)2,346.6 units

Question 19

A recent supply chain management practice that places suppliers near buyers and enables suppliers to make replenishment decisions and provide inventory to the buyer,as needed,and requires information sharing is

A)third party service providers
B)supplier hubs
C)single sourcing
D)continuous replenishment programs

Question 20

Annual inventory carrying costs in the U.S.are estimated to be over

A)$200 billion
B)$400 billion
C)$700 billion
D)$1 trillion