Question 1

Inventory is only products that are made and stored.

Accepted Answer

A) True 
 B)False

Question 2

Kim's Nail Salon orders nail polish and various other supplies for which the holding costs are $5 per unit per year, the ordering costs are $120 per order, and sales are relatively constant at 300 per month. What is the optimal order quantity? What is the average inventory? How many times per month should Kim order? What are her annual inventory management costs?

Accepted Answer

The answer of Kim's Nail Salon orders nail polish and...

Question 3

Average_________ is a measure of how much we carry on average, on any given day, over a specific time period.

Accepted Answer

The answer of Average_________ is a measure of how much...

Question 4

Sustainability in inventory management is not feasible because every business needs some amount of inventory.

Accepted Answer

A) True 
 B)False

Question 5

The just-in-time (JIT) philosophy calls for placing orders or manufacturing at the time of need, with the objective of minimizing total inventory costs.

Accepted Answer

A) True 
 B)False

Question 6

The ROP approach works best for A category items (in ABC analysis) and for vital (VED) items where stock-outs can lead to serious losses in revenues or catastrophic consequences.

Accepted Answer

A) True 
 B)False

Question 7

ABC analysis classifies inventory items into three groups, usually based on total dollar sales.

Accepted Answer

A) True 
 B)False

Question 8

Increasing the inventory turnover ratio increases revenues.

Accepted Answer

A) True 
 B)False

Question 9

The goal of inventory management, in most cases, is to maximize revenues by avoiding or minimizing stock-outs.

Accepted Answer

A) True 
 B)False

Question 10

Technologies such as RFID (radio frequency identification devices) are making inventory management more complicated and inaccurate.

Accepted Answer

A) True 
 B)False

Question 11

Identify the major categories and list the direct and indirect components of inventory holding costs.

Accepted Answer

The answer of Identify the major categories and list the...

Question 12

The continuous review model signals when it's time to reorder by setting a(n) _________ in terms of the inventory position.

Accepted Answer

The answer of The continuous review model signals when it's...

Question 13

Inventory can also be described in terms of how it has been acquired: cyclically or annually.

Accepted Answer

A) True 
 B)False

Question 14

In the basic EOQ model, if D = 5,000 per year, S = $100, and H = $1 per unit per year, then the economic order quantity is

Accepted Answer

A)  707 
B)  50 
C)  1,000 
D)  100

Question 15

Which of the following is not an assumption of the traditional economic order quantity (EOQ) model?

Accepted Answer

A)  Holding and ordering costs are stable and known. 
B)  Demand is constant and known. 
C)  Supply lead time is constant and known. 
D)  Quantity discounts are possible.

Question 16

JIT run supply lines are especially vulnerable to disruptions.

Accepted Answer

A) True 
 B)False

Question 17

Three primary metrics of inventory performance measures are the average aggregate inventory, the average cycle service level (CSL), and the average fill rate.

Accepted Answer

A) True 
 B)False

Question 18

OU812 produces donuts for which the annual demand is 100,000 units. Holding costs are $0.05 per unit per day, and the setup costs are $200. If they wish to produce the donuts following an EOQ model, what lot size should be used? What is the average inventory level? How many production cycles are there per year? How much does following this EOQ policy cost the firm each year?

Accepted Answer

The answer of OU812 produces donuts for which the annual...

Question 19

Which of the following is not an inventory performance measure?

Accepted Answer

A)  average days of inventory turnover 
B)  average aggregate inventory 
C)  average cycle service level 
D)  All of the above are inventory performance measures.

Question 20

Technology such as an RFID (radio frequency identification device) provides a way to query and track the physical location of inventory.

Accepted Answer

A) True 
 B)False

Exam 8: Managing Inventory

Inventory is only products that are made and stored.

Average_________ is a measure of how much we carry on average, on any given day, over a specific time period.

Sustainability in inventory management is not feasible because every business needs some amount of inventory.

The just-in-time (JIT) philosophy calls for placing orders or manufacturing at the time of need, with the objective of minimizing total inventory costs.

The ROP approach works best for A category items (in ABC analysis) and for vital (VED) items where stock-outs can lead to serious losses in revenues or catastrophic consequences.

ABC analysis classifies inventory items into three groups, usually based on total dollar sales.

Increasing the inventory turnover ratio increases revenues.

The goal of inventory management, in most cases, is to maximize revenues by avoiding or minimizing stock-outs.

Technologies such as RFID (radio frequency identification devices) are making inventory management more complicated and inaccurate.

Identify the major categories and list the direct and indirect components of inventory holding costs.

The continuous review model signals when it's time to reorder by setting a(n) _________ in terms of the inventory position.

Inventory can also be described in terms of how it has been acquired: cyclically or annually.

In the basic EOQ model, if D = 5,000 per year, S = $100, and H = $1 per unit per year, then the economic order quantity is

Which of the following is not an assumption of the traditional economic order quantity (EOQ) model?

JIT run supply lines are especially vulnerable to disruptions.

Three primary metrics of inventory performance measures are the average aggregate inventory, the average cycle service level (CSL), and the average fill rate.

Which of the following is not an inventory performance measure?

Technology such as an RFID (radio frequency identification device) provides a way to query and track the physical location of inventory.