Question 1

Demand on Central Supply tends to be:

Accepted Answer

A)  Smoothed out with planned orders. 
B)  Continuous 
C)  Monotonous 
D)  Lower than the Distribution Centers 
E)  Lumpy

Question 2

If the on hand inventory is 40 units, the safety stock 20 units and the target level is 120 units then an order should be placed for:

Accepted Answer

A)  100 units 
B)  80 units 
C)  60 units 
D)  40 units 
E)  20 units

Question 3

Lead time for a given item is 3 weeks and sales have been recorded in 1 week intervals. If the Standard Deviation for the sales interval is 25 then the Standard Deviation for the lead time should be approximately:

Accepted Answer

A)  25 
B)  43 
C)  75 
D)  14 
E)  8

Question 4

Select the description which most closely fits the term SAFETY STOCK:

Accepted Answer

A)  the time it takes to replenish an item in inventory. 
B)  extra inventory of an item carried to protect against variations in demand during lead time 
C)  a listing of components required to manufacture a product 
D)  the time when an order should be placed 
E)  none of the above

Question 5

Select the description which most closely fits the term LEAD TIME:

Accepted Answer

A)  the time it takes to replenish an item in inventory 
B)  extra inventory of an item carried to protect against variations in demand during lead time 
C)  a listing of components required to manufacture a product 
D)  the time when an order should be placed 
E)  none of the above

Question 6

Which of the following statements is best?
I. In a pull system central supply determines what is needed by the distribution centers
II. In a push system all decisions are made by the distribution centers.
III. An advantage of a pull system is central coordination

Accepted Answer

A)  I and II only are true 
B)  II and III only are true 
C)  I and III only are true 
D)  all the above are true 
E)  none of the above are true

Question 7

Management states that they will tolerate one stockout every year for a specific item. If 10 orders are placed for the item each year the service level desired is:

Accepted Answer

A)  80% 
B)  85% 
C)  90% 
D)  95% 
E)  none of the above

Question 8

Use the following information to answer the next two questions
Distribution Center A Transit time: 1week Order Quantity 200 units
 $\begin{array}{lccccc}
\text { Week } && 1 & 2 & 3 & 4 & 5 \
\text { Gross Requirements } && 150 & 125 & 125 & 100 & 150 \
\text { In Transit } && 200 & & & &\\text { Projected Available }&75\\text { Planned Order Release }
\end{array}$
-What will be the projected available for periods 2, 3 and 4?

Accepted Answer

A)  200, 75, 175 
B)  125, 0, 100 
C)  75, 175, 25 
D)  0, 75, 175 
E)  125, 0, 75

Question 9

Management is willing to tolerate one stockout every 2 years for a specific item. If 10 orders are placed for the item each year the service level desired is:

Accepted Answer

A)  80% 
B)  85% 
C)  90% 
D)  95% 
E)  none of the above

Question 10

Which of the following are objectives of distribution inventory management?
I. To provide the required level of customer service.
II. To minimize the costs of transportation and handling.
III. To always have enough of everything on hand so there are no stockouts.
IV. To be able to interact with the factory so as to minimize scheduling problems.

Accepted Answer

A)  all the above are objectives 
B)  I, II and III 
C)  I, II and IV 
D)  I, III and IV 
E)  II, III and IV

Question 11

The Gross Requirements on Central Supply are:

Accepted Answer

A)  The sum of the planned order releases from the Distribution Centers 
B)  Taken from the Distribution Centers and offset by the lead time 
C)  The sum of the Gross Requirements for the Distribution Centers 
D)  The sum of the gross requirements for the DC's offset by the lead time. 
E)  The same as the Intransit Inventory

Question 12

Among other things the amount of safety stock carried will depend upon:

Accepted Answer

A)  the frequency of reorder 
B)  the service level desired 
C)  variability of demand during the lead time 
D)  all the above 
E)  a and b above

Question 13

A company that keeps no safety stock can expect an average service level of

Accepted Answer

A)  0% 
B)  15% 
C)  50% 
D)  85% 
E)  Safety stock does not affect the service level.

Question 14

Which of the following statements is best?

Accepted Answer

A)  order point = DDLT + SS 
B)  average inventory = Q ÷ 2 + SS 
C)  safety stock is always needed 
D)  a and b are true 
E)  d and c are true

Question 15

Use the following information to answer the next two questions
Distribution Center A Transit time: 1week Order Quantity 200 units
 $\begin{array}{lccccc}
\text { Week } && 1 & 2 & 3 & 4 & 5 \
\text { Gross Requirements } && 150 & 125 & 125 & 100 & 150 \
\text { In Transit } && 200 & & & &\\text { Projected Available }&75\\text { Planned Order Release }
\end{array}$
-There will be a planned order release(s) in weeks:

Accepted Answer

A)  2 and 3 
B)  1 and 2 
C)  1 and 3 
D)  1, 2 and 3 
E)  Intransit inventory will cover all the orders.

Question 16

Given that the lead time is 1 week and the sigma is 100 units, if the lead time changes to 2 weeks then the sigma would change to about:

Accepted Answer

A)  200 units 
B)  180 units 
C)  160 units 
D)  140 units 
E)  120 units

Question 17

If the sum of the absolute deviations of demand was 500 for 10 periods, MAD would be:

Accepted Answer

A)  5 
B)  500 
C)  50 
D)  0.02 
E)  none of the above

Question 18

Which of the following statements is best?

Accepted Answer

A)  most demand patterns tend to be stable and predictable 
B)  the most common predictable pattern is called a normal distribution 
C)  the normal curve can be described by its average (mean) and the variation of actual demand about the average 
D)  all the above are true 
E)  only and b are true

Question 19

For a given item controlled by a periodic review system the target level is 100 units. If there are 40 units on the shelf and the lead time is 2 weeks then the order quantity should be:

Accepted Answer

A)  140 units 
B)  120 units 
C)  85 units 
D)  60 units 
E)  40 units

Question 20

When using the order point system which of the following is true?

Accepted Answer

A)  order quantities are usually fixed 
B)  the order point depends upon the demand during the lead time plus safety stock 
C)  time intervals between orders are constant 
D)  a and b above 
E)  b and c above

Exam 11: Independent Demand Ordering Systems

Demand on Central Supply tends to be:

If the on hand inventory is 40 units, the safety stock 20 units and the target level is 120 units then an order should be placed for:

Lead time for a given item is 3 weeks and sales have been recorded in 1 week intervals. If the Standard Deviation for the sales interval is 25 then the Standard Deviation for the lead time should be approximately:

Select the description which most closely fits the term SAFETY STOCK:

Select the description which most closely fits the term LEAD TIME:

Which of the following statements is best? I. In a pull system central supply determines what is needed by the distribution centers II. In a push system all decisions are made by the distribution centers. III. An advantage of a pull system is central coordination

Management states that they will tolerate one stockout every year for a specific item. If 10 orders are placed for the item each year the service level desired is:

Management is willing to tolerate one stockout every 2 years for a specific item. If 10 orders are placed for the item each year the service level desired is:

The Gross Requirements on Central Supply are:

Among other things the amount of safety stock carried will depend upon:

A company that keeps no safety stock can expect an average service level of

Which of the following statements is best?

Given that the lead time is 1 week and the sigma is 100 units, if the lead time changes to 2 weeks then the sigma would change to about:

If the sum of the absolute deviations of demand was 500 for 10 periods, MAD would be:

Which of the following statements is best?

For a given item controlled by a periodic review system the target level is 100 units. If there are 40 units on the shelf and the lead time is 2 weeks then the order quantity should be:

When using the order point system which of the following is true?