Question 1

The inventory management system which represents the continuous goal of eliminating waste is called the __________ inventory management.

Accepted Answer

The answer of The inventory management system which represents the...

Question 2

Dry Creek Company decreased the size of inventory order quantities that had previously been determined using the EOQ model. If demand remains the same, what is the impact on the number of orders made during the year?

Accepted Answer

A) no change 
B) increase 
C) decrease 
D) cannot be determined

Question 3

The quantity that minimizes total cost is called the:

Accepted Answer

A) economic order quantity. 
B) total order quantity. 
C) binding order quantity. 
D) linear order quantity.

Question 4

Knoxville Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labor hours and 400 machine hours are available for production. Time requirements to produce one unit of X and Y are as follows: $\begin{array}{lll}&\text { Froduct } \mathrm{X}& \text { Product } Y\
\text { Labor hours per unit } & 1 & 2 \
\text { Machine hours per unit } & 5 & 1
\end{array}$ What is the objective function to maximize profits for Knoxville Manufacturing Company?

Accepted Answer

A) Minimize 10X + 90Y 
B) Maximize 10X + 90Y 
C) Maximize 1X + 2Y 
D) Minimize 1X + 2Y

Question 5

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Accepted Answer

The answer of The optimal mix chosen which maximizes the...

Question 6

Competitive pressures have led many companies to favor the JIT inventory approach.

Accepted Answer

A) True 
 B)False

Question 7

JIT is a manufacturing approach focused on present demand rather than anticipated demand.

Accepted Answer

A) True 
 B)False

Question 8

Under the Kanban system, which of the following controls the movement of work among manufacturing processes?

Accepted Answer

A) A drummer Kanban 
B) A binding Kanban 
C) A withdrawal Kanban 
D) A feasible Kanban

Question 9

The following information is available for Woodside Furniture Company, which sells two products: $$\begin{array} { l c c } 
&\text { Chair } \mathrm { X } & \text { Chair } \mathrm { Y } \
\text { Processing time } & 4 \text { hours } & 6 \text { hours } \
\text { Metal used } & 30 \text { sq. t. } & 18 \text { sq. t. } \
\text { Selling price } & \$ 200.00 & \$ 100.00 \
\text { Variable cost } & \$ 150.00 & \$ 60.00 \
\text { Fixed cost } & \$ 30.00 & \$ 30.00
\end{array}$$ There are 200 hours available in the plant and 200 square feet of metal available per operating period. The constraint equation representing processing time available is

Accepted Answer

A) 4X + 6Y ? 200. 
B) 4X + 6Y ? 200. 
C) 30X + 18Y ? 200. 
D) 4X + 6Y ? 400.

Question 10

The correct order for the four steps that must be followed to solve problems graphically is

Accepted Answer

A) Graph each constraint, Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
B) Identify the feasible set of solutions, Graph each constraint, Identify all the corner-point values in the feasible set, Select the corner point that yields the largest value for the objective function. 
C) Identify the feasible set of solutions, Identify all the corner-point values in the feasible set, Graph each constraint, Select the corner point that yields the largest value for the objective function. 
D) Graph each constraint, Identify all the corner-point values in the feasible set, Identify the feasible set of solutions, Select the corner point that yields the largest value for the objective function.

Question 11

Walrus Company has the following information available concerning one of its inventory items: $$\begin{array} { l r } 
\text { Cost of placing an or der } & \$ 30.00 \
\text { Unit carrying cost per year } & \$ 3.00 \
\text { Annual unit demand } & 6,625 \
\text { Safety stock } & 125 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$$ If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?

Accepted Answer

A) 5 days 
B) 31 days 
C) 26 days 
D) 110 days

Question 12

A linear programming model would NOT include which of the following items?

Accepted Answer

A) independent variables 
B) networks 
C) dependent variables 
D) objective function

Question 13

Using the graphic approach to linear programming, the solution is usually

Accepted Answer

A) a corner point where two or more constraints intersect. 
B) where the lines intersect farthest from zero. 
C) the point farthest from the Y-axis. 
D) the point farthest from the X-axis.

Question 14

With multiple internal binding constraints, the optimal mix is determined by a graphical approach or the simplex method.

Accepted Answer

A) True 
 B)False

Question 15

Montgomery 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: $\begin{array}{lcc} 
& \text { Product A } & \text { Product B } \
\text { Labor hours per unit } & 6 & 3 \
\text { Machine hours per unit } & 2 & 5
\end{array}$
What is the constraint on machine hours for Montgomery Company?

Accepted Answer

A) 2A + 5B ? 500 
B) 2A + 5B ? 300 
C) 6A + 3B ? 500 
D) 40A + 30B ? 500

Question 16

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

Question 17

One of the traditional reasons for holding inventory is to avoid shutdowns due to unavailability of materials. The JIT solution is to

Accepted Answer

A) reduce setup costs. 
B) reduce lead time. 
C) use long-term contracts with suppliers. 
D) use total preventive maintenance.

Question 18

Moriah's Candle Company manufactures candles. The company buys wax in 45-Kilogram 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.
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

Question 19

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

Accepted Answer

The answer of The focus on the goal of making...

Question 20

Moriah's Candle Company manufactures candles. The company buys wax in 45-Kilogram 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.
The economic order quantity (rounded) is

Accepted Answer

A) 1,000 containers. 
B) 750 containers. 
C) 45 containers. 
D) 387 containers.

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

The inventory management system which represents the continuous goal of eliminating waste is called the __________ inventory management.

Dry Creek Company decreased the size of inventory order quantities that had previously been determined using the EOQ model. If demand remains the same, what is the impact on the number of orders made during the year?

The quantity that minimizes total cost is called the:

The optimal mix chosen which maximizes the total contribution margin given the constraints face by a firm is called __________ .

Competitive pressures have led many companies to favor the JIT inventory approach.

JIT is a manufacturing approach focused on present demand rather than anticipated demand.

Under the Kanban system, which of the following controls the movement of work among manufacturing processes?

The correct order for the four steps that must be followed to solve problems graphically is

A linear programming model would NOT include which of the following items?

Using the graphic approach to linear programming, the solution is usually

With multiple internal binding constraints, the optimal mix is determined by a graphical approach or the simplex method.

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

One of the traditional reasons for holding inventory is to avoid shutdowns due to unavailability of materials. The JIT solution is to

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