Question 1

In ABC analysis, "A" Items are the most tightly controlled.

Accepted Answer

A) True 
 B)False

Question 2

Safety stock in inventory systems depends only on the average demand during the lead time.

Accepted Answer

A) True 
 B)False

Question 3

What is a fixed-period system?

Accepted Answer

The answer of What is a fixed-period system?...

Question 4

A(n) __________ system triggers inventory ordering on a uniform time frequency.

Accepted Answer

The answer of A(n) __________ system triggers inventory ordering on...

Question 5

The EOQ model with quantity discounts attempts to determine

Accepted Answer

A)  what is the lowest amount of inventory necessary to satisfy a certain service level 
B)  what is the lowest purchasing price 
C)  whether to use fixed-quantity or fixed-period order policy 
D)  how many units should be ordered 
E)  what is the shortest lead time

Question 6

What are the assumptions of the EOQ model?

Accepted Answer

The answer of What are the assumptions of the EOQ...

Question 7

Service level is the complement of the probability of a stockout.

Accepted Answer

A) True 
 B)False

Question 8

List the typical components that constitute inventory holding or carrying costs.

Accepted Answer

The answer of List the typical components that constitute inventory...

Question 9

Most inventory models attempt to minimize

Accepted Answer

A)  the likelihood of a stockout 
B)  the number of items ordered 
C)  total inventory based costs 
D)  the number of orders placed 
E)  the safety stock

Question 10

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

The answer of Amazon's original concept of operating without inventory...

Question 11

What are the main reasons that an organization has inventory?

Accepted Answer

The answer of What are the main reasons that an...

Question 12

A(n) __________ model gives satisfactory answers even with substantial variations in its parameters.

Accepted Answer

The answer of A(n) __________ model gives satisfactory answers even...

Question 13

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires a safety stock of approximately

Accepted Answer

A)  28 units 
B)  30 units 
C)  49 units 
D)  59 units 
E)  114 units

Question 14

In the production order quantity model, the fraction of inventory that is used immediately and not stored is represented by the ratio of __________.

Accepted Answer

The answer of In the production order quantity model, the...

Question 15

Which of the following statements about quantity discounts is False?

Accepted Answer

A)  The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. 
B)  In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. 
C)  If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. 
D)  The larger annual demand, the less attractive a discount schedule will be. 
E)  The smaller the ordering cost, the less attractive a discount schedule will be.

Question 16

Describe the costs associated with ordering and maintaining inventory.

Accepted Answer

The answer of Describe the costs associated with ordering and...

Question 17

Central University uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year. The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price. How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?

Accepted Answer

The answer of Central University uses $123,000 of a particular...

Question 18

Compare the assumptions of the production order quantity model to those of the basic EOQ model.

Accepted Answer

The answer of Compare the assumptions of the production order...

Question 19

Assume two inventory problems with identical demand, holding cost, and setup cost. In one, goods arrive instantly, but in the other goods arrive at a measurable rate. Which of these problems will have the larger optimal order quantity?
 Why?

Accepted Answer

The answer of Assume two inventory problems with identical demand,...

Question 20

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 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

The answer of Daily demand for a product is normally...

Exam 15: Inventory Management

In ABC analysis, "A" Items are the most tightly controlled.

Safety stock in inventory systems depends only on the average demand during the lead time.

What is a fixed-period system?

A(n) __________ system triggers inventory ordering on a uniform time frequency.

The EOQ model with quantity discounts attempts to determine

What are the assumptions of the EOQ model?

Service level is the complement of the probability of a stockout.

List the typical components that constitute inventory holding or carrying costs.

Most inventory models attempt to minimize

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

What are the main reasons that an organization has inventory?

A(n) __________ model gives satisfactory answers even with substantial variations in its parameters.

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires a safety stock of approximately

In the production order quantity model, the fraction of inventory that is used immediately and not stored is represented by the ratio of __________.

Which of the following statements about quantity discounts is False?

Describe the costs associated with ordering and maintaining inventory.

Compare the assumptions of the production order quantity model to those of the basic EOQ model.

Assume two inventory problems with identical demand, holding cost, and setup cost. In one, goods arrive instantly, but in the other goods arrive at a measurable rate. Which of these problems will have the larger optimal order quantity? Why?