Question 1

In the fixed-order-interval model, the order size is the same for each order.

Accepted Answer

A) True 
 B)False

Question 2

In a two-bin inventory system, the amount contained in the second bin is equal to the

Accepted Answer

A)  ROP.
B)  EOQ.
C)  amount in the first bin.
D)  optimum stocking level.
E)  safety stock.F) All of the above
G) A) and B)

Question 3

Understocking an inventory item is a sure sign of inadequate inventory control.

Accepted Answer

A) True 
 B)False

Question 4

Decoupling operations means to break the linkage between two sequential operations.

Accepted Answer

A) True 
 B)False

Question 5

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

Accepted Answer

A)  20 times 2
B)  20 times 10
C)  2 times the square root of 20
D)  2 times the square root of 10
E)  400 times the square root of 10F) C) and E)
G) B) and D)

Question 6

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be theaverage total daily costs, including the cost of the pepperoni?

Accepted Answer

A)  $60.00
B)  $63.20
C)  $64.00
D)  $64.10
E)  $65.00F) B) and D)
G) B) and E)

Question 7

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, at what point should bills be reordered?

Accepted Answer

A)  0 bills remaining
B)  417 bills remaining
C)  2,500 bills remaining
D)  10,000 bills remaining
E)  12,500 bills remainingF) C) and E)
G) A) and B)

Question 8

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

Accepted Answer

A) True 
 B)False

Question 9

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

Accepted Answer

A)  A items.
B)  B items.
C)  C items.
D)  A items plus B items.
E)  B items plus C items.F) B) and C)
G) C) and D)

Question 10

A cycle count program will usually require that Class A items be counted

Accepted Answer

A)  daily.
B)  once a week.
C)  monthly.
D)  quarterly.
E)  more often than annually.F) None of the above
G) A) and D)

Question 11

The basic EOQ model ignores the purchasing cost.

Accepted Answer

A) True 
 B)False

Question 12

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the length of an order cycle?

Accepted Answer

A)  0.48 days
B)  2.08 days
C)  6 days
D)  8.4 days
E)  14.4 daysF) C) and E)
G) C) and D)

Question 13

Which of the following can be calculated by dividing profit after taxes by total assets?

Accepted Answer

A)  return on investment
B)  return on equity
C)  return on assets
D)  return on sales
E)  return on invested capitalF) A) and B)
G) D) and E)

Question 14

The single-period model can be very helpful in determining when to order.

Accepted Answer

A) True 
 B)False

Question 15

Which item would be least likely to be ordered under a fixed-order-interval system?

Accepted Answer

A)  textbooks at a college bookstore
B)  auto parts at an assembly plant
C)  cards at a gift shop
D)  canned peas at a supermarket
E)  magazines at a news standF) A) and B)
G) None of the above

Question 16

Which of the following is least likely to be included in order costs?

Accepted Answer

A)  processing vendor invoices for payment
B)  processing purchase orders
C)  inspecting incoming goods for quantity
D)  taking an inventory to determine how much is needed
E)  temporary storage of delivered goodsF) A) and B)
G) A) and D)

Question 17

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Accepted Answer

A) True 
 B)False

Question 18

The fixed-order-interval model would be most likely to be used for this situation

Accepted Answer

A)  A company has switched from mass production to lean production.
B)  Production is done in batches.
C)  Spare parts are ordered when a new machine is purchased.
D)  Grouping orders can save shipping costs.
E)  Demand is highly variableF) C) and E)
G) B) and D)

Question 19

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Accepted Answer

A)  100 units.
B)  200 units.
C)  300 units.
D)  600 units.
E)  700 units.F) A) and E)
G) D) and E)

Question 20

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Accepted Answer

A)  0.
B)  0.33.
C)  0.50.
D)  0.67.
E)  0.75.F) All of the above
G) B) and C)

Exam 12: Inventory Management

In the fixed-order-interval model, the order size is the same for each order.

Correct Answer
verified

A cycle count program will usually require that Class A items be counted

Correct Answer
verified

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Correct Answer
verified

The single-period model can be very helpful in determining when to order.

Correct Answer
verified

The basic EOQ model ignores the purchasing cost.

Correct Answer
verified

Which item would be least likely to be ordered under a fixed-order-interval system?

Correct Answer
verified

Which of the following is least likely to be included in order costs?

Correct Answer
verified

The fixed-order-interval model would be most likely to be used for this situation

Correct Answer
verified

In a two-bin inventory system, the amount contained in the second bin is equal to the

Correct Answer
verified

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Correct Answer
verified

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Correct Answer
verified

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

Correct Answer
verified

Understocking an inventory item is a sure sign of inadequate inventory control.

Correct Answer
verified

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

Correct Answer
verified

Which of the following can be calculated by dividing profit after taxes by total assets?

Correct Answer
verified

Correct Answer
verified

Decoupling operations means to break the linkage between two sequential operations.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

Correct Answer
verified

Exam 12: Inventory Management

In the fixed-order-interval model, the order size is the same for each order.

Correct AnswerverifiedShow Answer

A cycle count program will usually require that Class A items be counted

Correct AnswerverifiedShow Answer

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Correct AnswerverifiedShow Answer

The single-period model can be very helpful in determining when to order.

Correct AnswerverifiedShow Answer

The basic EOQ model ignores the purchasing cost.

Correct AnswerverifiedShow Answer

Which item would be least likely to be ordered under a fixed-order-interval system?

Correct AnswerverifiedShow Answer

Which of the following is least likely to be included in order costs?

Correct AnswerverifiedShow Answer

The fixed-order-interval model would be most likely to be used for this situation

Correct AnswerverifiedShow Answer

In a two-bin inventory system, the amount contained in the second bin is equal to the

Correct AnswerverifiedShow Answer

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

Correct AnswerverifiedShow Answer

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Correct AnswerverifiedShow Answer

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

Correct AnswerverifiedShow Answer

Understocking an inventory item is a sure sign of inadequate inventory control.

Correct AnswerverifiedShow Answer

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

Correct AnswerverifiedShow Answer

Which of the following can be calculated by dividing profit after taxes by total assets?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Decoupling operations means to break the linkage between two sequential operations.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as

Correct AnswerverifiedShow Answer

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