Question 1

Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labour hours and 400 machine hours are available for production.
Time requirements to produce one unit of X and Y are as follows:
$$\begin{array} { l c c } 
& \text { Product X } & \text { Product Y } \
\text { Labour hours per unit }  & 1 & 2 \
\text { Machine hours per unit } & 5 & 1
\end{array}$$
-Refer to the figure.What is the constraint on labour hours for Tiffany Manufacturing Company?

Accepted Answer

A) 1X + 2Y $\leq $ 200 
B) 1X + 2Y$\leq $400 
C) 1X + 4Y$\leq $400 
D) 10X + 90Y$\leq $10 200

Question 2

Nashville Company manufactures candy.The company buys chocolate used in the candy in 10-kilogram boxes that cost $10 each.The company uses 30,000 of the boxes per year,and usage occurs evenly throughout the year.
The average cost to carry a 10-kilogram box in inventory per year is $4,and the cost to place an order is $3.
a.Determine the economic order quantity for the chocolate in terms of 10- kilogram boxes.
b.If the company works 250 days per year,on the average,how many boxes of chocolate are used per working day?
c.If the lead time for an order is normally eight working days,determine the reorder point for chocolate.
d.If 50 boxes of chocolate are carried as safety stock,determine the reorder point for the chocolate.

Accepted Answer

The answer of Nashville Company manufactures candy.The company buys chocolate...

Question 3

On which three operation measures of system performance does theory of constraints focus?

Accepted Answer

A) inventory,throughput,and loose constraints 
B) throughput,operating expenses,and product mix 
C) throughput,inventory,and operating expenses 
D) throughput,operating expenses,and contribution margin

Question 4

Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

Accepted Answer

A) increase 
B) no change 
C) decrease 
D) substantial decrease

Question 5

Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labour hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
$$\begin{array} { l c c c } 
 & \text { Product A } & \text { Praduct B } \
\text { Labour hours per unit }& 5 & 2 \
\text { Machine hours per unit }  & 1 & 4
\end{array}$$
-Refer to the figure.What is the constraint on machine hours for Heft Company?

Accepted Answer

A) 1A + 4B $\leq $ 300 
B) 1A + 4B $\leq $500 
C) 5A + 2B $\leq $ 500 
D) 40A + 30B $\leq $ 500

Question 6

Refer to the figure.If the company operates 200 days a year and the lead time for the item is five days,what is the reorder point if a safety stock of 50 units is maintained?

Accepted Answer

A) 4 days 
B) 25 units 
C) 50 units 
D) 175 units

Question 7

Which of the following are strategic objectives of JIT?

Accepted Answer

A) increasing inventory 
B) improving a firm's competitive position 
C) increasing inventory cost 
D) improving a firm's non-value-added activities

Question 8

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

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 9

What is the term for a marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery?

Accepted Answer

A) a production Kanban 
B) a vendor Kanban 
C) a withdrawal Kanban 
D) a deposit Kanban

Question 10

What is the term for the cost of preparing equipment and facilities so they can be used to produce a particular product or component?

Accepted Answer

A) ordering costs 
B) setup costs 
C) carrying costs 
D) inventory costs

Question 11

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

Accepted Answer

A) (1)Graph each constraint,(2)identify the feasible set of solutions,(3)identify all the corner-point values in the feasible set,(4)select the corner point that yields the largest value for the objective function. 
B) (1)Identify the feasible set of solutions,(2)graph each constraint,(3)identify all the corner-point values in the feasible set,(4)select the corner point that yields the largest value for the objective function. 
C) (1)Identify the feasible set of solutions,(2)identify all the corner-point values in the feasible set,(3)graph each constraint,(4)select the corner point that yields the largest value for the objective function. 
D) (1)Graph each constraint,(2)identify all the corner-point values in the feasible set,(3)identify the feasible set of solutions,(4)select the corner point that yields the largest value for the objective function.

Question 12

What is the definition of a drummer?

Accepted Answer

A) the inventory needed to keep the constrained resource busy for a specified time interval 
B) the major binding constraint 
C) the minor binding constraint 
D) the actions taken to tie the rate at which materials are released into the plant (at the first operation)to the production rate of the constrained resource

Question 13

What does economic order quantity do?

Accepted Answer

A) minimizes the total costs of ordering and carrying inventory 
B) maximizes the stockout costs 
C) minimizes the costs of ordering 
D) maximizes the cost of carrying inventory

Question 14

Baldwin Corporation produces two types of wagon frames,(Frame X and Frame Y).Frame X passes through four processes: cutting,welding,polishing,and painting.Frame Y uses three of the same processes: cutting,welding,and painting.Each of the four processes employs 40 workers who work 8 hours each day.Frame X sells for $80 per unit,and Frame Y sells for $110 per unit.Materials is the only unit-level variable expense.The materials cost for Frame X is $40 per unit,and the materials cost for Frame Y is $50 per unit.Baldwin's accounting system has provided the following additional information about its operations and products:
  Baldwin's management has determined that any production interruptions can be corrected within two days. 
a.Assuming that Baldwin can meet daily market demand,compute the potential daily profit.Now compute the minutes needed for each process to meet the daily market demand.Can Baldwin meet daily market demand? If not,where is the bottleneck? Can you derive an optimal mix without using a graphical solution? If so,explain how.
b.Explain how a drum-buffer-rope system would work for Baldwin.

Accepted Answer

The answer of Baldwin Corporation produces two types of wagon...

Question 15

If inventory consists of goods produced internally,what are the inventory-related costs?

Accepted Answer

A) ordering and production costs 
B) setup costs and carrying costs 
C) ordering and setup costs 
D) production and carrying costs

Question 16

How does JIT reduce lead times to meet delivery dates?

Accepted Answer

A) by reducing setup times 
B) by expediting delivery to customers 
C) by having more inventory available 
D) by working overtime to fill orders

Question 17

The ordering of small,frequent orders minimizes which of the following costs?

Accepted Answer

A) stockout costs 
B) ordering costs 
C) carrying costs 
D) production costs

Exam 18: Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints