Question 1

According to the global company profile,Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

Accepted Answer

A) True 
 B)False

Question 2

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 how much safety stock?

Accepted Answer

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

Question 3

Work-in-process inventory is devoted to maintenance,repair,and operating materials.

Accepted Answer

A) True 
 B)False

Question 4

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The cost-minimizing solution for this product is to order:

Accepted Answer

A) all 4000 units at one time. 
B) 200 units per order. 
C) every 20 days. 
D) 10 times per year. 
E) none of the above

Question 5

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order.The revised EOQ is:

Accepted Answer

A) three times as large. 
B) one-third as large. 
C) nine times as large. 
D) one-ninth as large. 
E) cannot be determined

Question 6

In an economic order quantity problem,the total annual cost curve is at its ________ where annual holding costs equal annual setup costs.

Accepted Answer

The answer of In an economic order quantity problem,the total...

Question 7

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

Accepted Answer

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

Question 8

________ is extra stock that is carried to serve as a buffer.

Accepted Answer

The answer of ________ is extra stock that is carried...

Question 9

Which of the following is NOT an assumption of the economic order quantity model shown below? Q* =

Accepted Answer

A) Demand is known,constant,and independent. 
B) Lead time is known and constant. 
C) Quantity discounts are not possible. 
D) Production and use can occur simultaneously. 
E) The only variable costs are setup cost and holding (or carrying)cost.

Question 10

A firm that makes electronic circuits has been ordering a certain raw material 250 ounces at a time.The firm estimates that carrying cost is I = 30% per year,and that ordering cost is about $20 per order.The current price of the ingredient is $200 per ounce.The assumptions of the basic EOQ model are thought to apply.For what value of annual demand is their action optimal?

Accepted Answer

The answer of A firm that makes electronic circuits has...

Question 11

For a certain item,the cost-minimizing order quantity obtained with the basic EOQ model is 200 units,and the total annual inventory (carrying and setup)cost is $600.What is the inventory carrying cost per unit per year for this item?

Accepted Answer

A) $1.50 
B) $2.00 
C) $3.00 
D) $150.00 
E) not enough data to determine

Question 12

________ is the time between placement and receipt of an order.

Accepted Answer

The answer of ________ is the time between placement and...

Question 13

Explain what "decoupling" means in the context of inventory management.

Accepted Answer

The answer of Explain what "decoupling" means in the context...

Question 14

What is the difference between P and Q inventory systems?

Accepted Answer

A) order size 
B) order spacing 
C) maximum service level 
D) lead time length 
E) A and B

Question 15

ABC analysis divides on-hand inventory into three classes,generally based upon which of the following?

Accepted Answer

A) item quality 
B) unit price 
C) the number of units on hand 
D) annual demand 
E) annual dollar volume

Question 16

The Rushton Trash Company stocks,among many other products,a certain container,each of which occupies four square feet of warehouse space.The warehouse space currently available for storing this product is limited to 600 square feet.Demand for the product is 15,000 units per year.Holding costs are $4 per container per year.Ordering costs are $5 per order.
(a)What is the cost-minimizing order quantity decision for Rushton?
(b)What is the total inventory-related cost of this decision?
(c)What is the total inventory-related cost of managing the inventory of this product,when the limited amount of warehouse space is taken into account?
(d)What would the firm be willing to pay for additional warehouse space?

Accepted Answer

The answer of The Rushton Trash Company stocks,among many other...

Question 17

Holstein Computing manufactures an inexpensive audio card (Audio Max)for assembly into several models of its microcomputers.The annual demand for this part is 100,000 units.The annual inventory carrying cost is $5 per unit and the cost of preparing an order and making production setup for the order is $750.The company operates 250 days per year.The machine used to manufacture this part has a production rate of 2000 units per day.
(a)Calculate the optimum lot size.
(b)How many lots are produced in a year?
(c)What is the average inventory for Audio Max?
(d)What is the annual holding and setup cost for Audio Max?

Accepted Answer

The answer of Holstein Computing manufactures an inexpensive audio card...

Question 18

Which of the following is NOT one of the four main types of inventory?

Accepted Answer

A) raw material inventory 
B) work-in-process inventory 
C) maintenance/repair/operating supply inventory 
D) safety stock inventory 
E) finished-goods inventory

Question 19

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements regarding control of service inventories is TRUE?

Accepted Answer

A) Service inventory is a fictional concept,because services are intangible. 
B) Service inventory needs no safety stock,because there's no such thing as a service stockout. 
C) Effective control of all goods leaving the facility is one applicable technique. 
D) Service inventory has carrying costs but no setup costs. 
E) Good personnel selection,training,and discipline are easy.

Exam 12: Managing Inventory

According to the global company profile,Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

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 how much safety stock?

Work-in-process inventory is devoted to maintenance,repair,and operating materials.

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The cost-minimizing solution for this product is to order:

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order.The revised EOQ is:

In an economic order quantity problem,the total annual cost curve is at its ________ where annual holding costs equal annual setup costs.

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

________ is extra stock that is carried to serve as a buffer.

Which of the following is NOT an assumption of the economic order quantity model shown below? Q* =

For a certain item,the cost-minimizing order quantity obtained with the basic EOQ model is 200 units,and the total annual inventory (carrying and setup) cost is $600.What is the inventory carrying cost per unit per year for this item?

________ is the time between placement and receipt of an order.

Explain what "decoupling" means in the context of inventory management.

What is the difference between P and Q inventory systems?

ABC analysis divides on-hand inventory into three classes,generally based upon which of the following?

Which of the following is NOT one of the four main types of inventory?

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

Which of the following statements regarding control of service inventories is TRUE?