Question 1

Dairy items, fresh fruit, and newspapers are items that:

Accepted Answer

A)   do not require safety stocks.
B)   cannot be ordered in large quantities.
C)   are subject to deterioration and spoilagE.
D)   require that prices be lowered every two days.
E)   have minimal holding costs.F) A) and D)
G) A) and C)

Question 2

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Accepted Answer

A) True 
 B)False

Question 3

A fill rate is the percentage of _____ filled by stock on hand.

Accepted Answer

A)   shipments
B)   demand
C)   inventory
D)   safety stock
E)   lead timeF) B) and C)
G) C) and D)

Question 4

An inventory buffer adds value and lowers cost in all supply chains.

Accepted Answer

A) True 
 B)False

Question 5

A single-period model would be used mainly by organizations going out of business.

Accepted Answer

A) True 
 B)False

Question 6

Given the same demand, setup/ordering costs, and carrying costs, the EPQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed.

Accepted Answer

A)   greater than the EOQ
B)   equal to the EOQ
C)   smaller than the EOQ
D)   greater than or equal to the EOQ
E)   smaller than or equal to the EOQF) B) and C)
G) All of the above

Question 7

Which of the following is not one of the assumptions of the basic EOQ model?

Accepted Answer

A)   Annual demand requirements are known and constant.
B)   Lead time does not vary.
C)   Each order is received in a single delivery.
D)   Quantity discounts are availablE.
E)   Ordering and holding costs have been estimated reasonably accurately.F) A) and D)
G) C) and D)

Question 8

The manager of the Quick Stop Corner Convenience Store (which never closes)  sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs) . Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
What is the economic order quantity for Stein beer?

Accepted Answer

A)   8 cases
B)   11 cases
C)   14 cases
D)   20 cases
E)   32 casesF) B) and E)
G) A) and D)

Question 9

Which one of the following is implied by a lead time service level of 95 percent?

Accepted Answer

A)   Approximately 95 percent of demand during lead time will be satisfied.
B)   Approximately 95 percent of inventory will be used during lead time.
C)   The probability is .95 that demand during lead time will exactly equal the amount on hand at the beginning of lead time.
D)   The probability is .95 that demand during lead time will not exceed the amount on hand at the beginning of lead timE.
E)   The probability is .95 that the order will arrive after the on-hand inventory is exhausted.F) C) and D)
G) B) and E)

Question 10

The EOQ model is most relevant for which one of the following?

Accepted Answer

A)   ordering items with dependent demand
B)   determination of safety stock
C)   ordering perishable items
D)   determining fixed-interval order quantities
E)   determining fixed order quantitiesF) B) and C)
G) None of the above

Question 11

If there are shipping cost economies that result from bundling orders for different items together, the __________ model becomes a relatively more attractive option.

Accepted Answer

A)   multi-period
B)   reorder-point
C)   fixed-order-quantity
D)   fixed-order-interval
E)   multi-itemF) A) and B)
G) C) and E)

Question 12

Safety stock is held because we anticipate future demand.

Accepted Answer

A) True 
 B)False

Question 13

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 D)
G) A) and C)

Question 14

An operations strategy for inventory management should work toward:

Accepted Answer

A)   increasing lot sizes.
B)   decreasing lot sizes.
C)   increasing safety stocks.
D)   decreasing service levels.
E)   increasing order quantities.F) A) and E)
G) A) and B)

Question 15

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 the average inventory level?

Accepted Answer

A)   20 pounds
B)   40 pounds
C)   60 pounds
D)   80 pounds
E)   100 poundsF) C) and E)
G) A) and B)

Question 16

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 dollar value of the average inventory level?

Accepted Answer

A)   $3,000
B)   $6,000
C)   $12,500
D)   $300,000
E)   $600,000F) A) and C)
G) A) and E)

Question 17

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

Accepted Answer

A)   daily.
B)   once a week.
C)   monthly.
D)   quarterly.
E)   more often than annually.F) B) and D)
G) A) and B)

Question 18

Which one of the following is implied by an annual service level of 95 percent?

Accepted Answer

A)   Approximately 95 percent of demand during lead time will be satisfied.
B)   The probability is .95 that demand will exceed supply during lead time.
C)   The probability is .95 that demand will equal supply during lead time.
D)   The probability is .95 that demand will not exceed supply during lead time.
E)   Approximately 95 percent of all demand will actually be satisfied directly from on-hand inventory.F) C) and D)
G) A) and E)

Question 19

A risk avoider would want ______ safety stock.

Accepted Answer

A)   less
B)   more
C)   the same
D)   zero
E)   50 percentF) A) and B)
G) B) and D)

Question 20

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

Accepted Answer

A)   have the lowest total cost.
B)   be in a feasible rangE.
C)   be to the left of the price break quantity for that price.
D)   have the largest quantity compared to other EOQs.
E)   have smaller ordering costs than the others.F) A) and D)
G) D) and E)

Exam 18: Inventory Management

An inventory buffer adds value and lowers cost in all supply chains.

Correct Answer
verified

A risk avoider would want ______ safety stock.

Correct Answer
verified

A single-period model would be used mainly by organizations going out of business.

Correct Answer
verified

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

Correct Answer
verified

If there are shipping cost economies that result from bundling orders for different items together, the __________ model becomes a relatively more attractive option.

Correct Answer
verified

Correct Answer
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Which of the following is not one of the assumptions of the basic EOQ model?

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

Correct Answer
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Which one of the following is implied by a lead time service level of 95 percent?

Correct Answer
verified

A fill rate is the percentage of _____ filled by stock on hand.

Correct Answer
verified

Correct Answer
verified

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Correct Answer
verified

The EOQ model is most relevant for which one of the following?

Correct Answer
verified

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

Correct Answer
verified

Safety stock is held because we anticipate future demand.

Correct Answer
verified

An operations strategy for inventory management should work toward:

Correct Answer
verified

Given the same demand, setup/ordering costs, and carrying costs, the EPQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed.

Correct Answer
verified

Correct Answer
verified

Dairy items, fresh fruit, and newspapers are items that:

Correct Answer
verified

Which one of the following is implied by an annual service level of 95 percent?

Correct Answer
verified

Exam 18: Inventory Management

An inventory buffer adds value and lowers cost in all supply chains.

Correct AnswerverifiedShow Answer

A risk avoider would want ______ safety stock.

Correct AnswerverifiedShow Answer

A single-period model would be used mainly by organizations going out of business.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If there are shipping cost economies that result from bundling orders for different items together, the __________ model becomes a relatively more attractive option.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not one of the assumptions of the basic EOQ model?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is implied by a lead time service level of 95 percent?

Correct AnswerverifiedShow Answer

A fill rate is the percentage of _____ filled by stock on hand.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

Correct AnswerverifiedShow Answer

The EOQ model is most relevant for which one of the following?

Correct AnswerverifiedShow Answer

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:

Correct AnswerverifiedShow Answer

Safety stock is held because we anticipate future demand.

Correct AnswerverifiedShow Answer

An operations strategy for inventory management should work toward:

Correct AnswerverifiedShow Answer

Given the same demand, setup/ordering costs, and carrying costs, the EPQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dairy items, fresh fruit, and newspapers are items that:

Correct AnswerverifiedShow Answer

Which one of the following is implied by an annual service level of 95 percent?

Correct AnswerverifiedShow Answer

Correct Answer
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