Question 1

A large hospital that batches orders for a variety of surgical supplies with its preferred supplier should use a

Accepted Answer

A)   P system.
B)   D system.
C)   Q system.
D)   Z system.

Question 2

At the economic order quantity,

Accepted Answer

A)   the annual ordering cost for an item is greater than the annual holding cost. . 
B)   the annual ordering cost and annual holding cost for an item are equal.
C)   the annual ordering cost for an item is less than the annual holding cost.
D)   none of these answers are true.

Question 3

The Cowboy Saddle Company manufactures plastic saddles that are used in the assembly process of their Mr.Ed doll.If the run time for producing a batch of saddles is 4 days,the rate of production is uniform at 500 saddles per day,and the uniform usage rate is 200 saddles per day,what is the maximum inventory quantity?
(Round to the nearest integer value.)

Accepted Answer

A)   900 saddles.
B)   1,200 saddles.
C)   1,500 saddles.
D)   1,800 saddles.

Question 4

Lincoln Machine Tool Company maintains an inventory pool consisting of 10 items.Each of these items has a unique demand pattern and may require a different kind of inventory management system.The annual demand pattern and the unit cost of these items are given in the following table.Conduct an ABC inventory analysis and classify these items into A,B,and C type of inventories.Suggest suitable methods for managing these three distinct types of inventories:

Accepted Answer

See below.
The ABC classification is do...

Question 5

Determinants of reorder levels (order point quantities) include all of the following EXCEPT

Accepted Answer

A)   rate of demand.
B)   length of lead time.
C)   length of the time interval between orders.
D)   demand and lead time variability.

Question 6

The average inventory level is defined as the difference between the cycle stock and the safety stock.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is INCORRECT regarding the EOQ model?

Accepted Answer

A)   EOQ assumes that the lead times are known and fixed.
B)   EOQ assumes that the demand rates are constant and are known in advance.
C)   EOQ calculations are based on a constant unit item cost and do not take discounts or rebates into consideration
D)   The ordering cost or the setup cost is dependent on the number of items ordered or manufactured.

Question 8

Given that unit item cost = $30,annual carrying charge = 15%,annual demand = 3,600 units,and ordering cost = $15 per order,the EOQ

Accepted Answer

A)   is 84.85 units.
B)   is 154.92 units.
C)   is 200 units.
D)   cannot be determined from the information given.

Question 9

A paint supplier that places orders for different colors of paint for delivery at the same time should use a

Accepted Answer

A)   P system.
B)   Q system.
C)   dependent demand inventory model.
D)   quantity discount model.

Question 10

Correctly complete the following statements.Independent demand and dependent demand differ in that

Accepted Answer

A)   independent demand is certain and is determined from a planned production schedule for finished goods, while dependent demand is uncertain and therefore needs to be forecast.
B)   inventory levels of independent demand items may be managed with a requirements philosophy, while inventory levels of dependent demand items may be managed by a replenishment philosophy.
C)   finished goods typically experience independent demand, while components of a product experience dependent demand.
D)   service firms experience dependent demand, while manufacturing firms experience independent demand.

Question 11

Which of the following is correct?

Accepted Answer

A)   Anticipation inventory of raw materials may be held when a firm expects raw materials shortages in the future.
B)   Pipeline inventory quantities are affected by mode of transportation.
C)   Safety stock may be held in raw materials, work-in-process, or finished goods.
D)   All of the above.

Question 12

Demand for an item is 10 units per week,and delivery lead time is 3 weeks.The safety stock is known to be 11 units.Using a Q system,what is the reorder point (R) ?

Accepted Answer

A)   Less than 20.
B)   30. 
C)   41.
D)   None of the above.

Question 13

Which cost defines the cost of capital?

Accepted Answer

A)   Item cost.
B)   Storage cost.
C)   Deterioration cost.
D)   Opportunity cost of investment in inventory.

Question 14

Service levels are

Accepted Answer

A)   the percentage of time the system has an item on hand.
B)   the percentage of demand filled from stock.
C)   the probability that all orders are filled from stock. 
D)  all of the above. D

Question 15

Independent demand inventory consists of

Accepted Answer

A)   inventory whose demand comes from independent suppliers.
B)   inventory that is independent of any known rules of demand and supply.
C)   demand that is related to the demand for another item.
D)   inventory whose demand is determined by market conditions outside the firm.

Question 16

A smaller lot size would result in fewer orders and increased inventory levels.

Accepted Answer

A) True 
 B)False

Question 17

In general,it is extremely difficult to estimate stockout costs and hence we use the desired service levels while computing the reorder points.

Accepted Answer

A) True 
 B)False

Question 18

If the actual order quantity Q is much larger than the economic order quantity,

Accepted Answer

A)   the firm is paying high annual holding costs.
B)   the firm is paying high annual ordering costs.
C)   the firm is paying total costs that are equivalent to EOQ costs.
D)   the firm should change its EOQ.

Question 19

Which of the following statements about ABC inventory classification schemes is FALSE?

Accepted Answer

A)   "A" items typically represent the smallest group in terms of the number of items.
B)   As little as 10-20% of the items may account for 60-80% of the annual dollar use.
C)   "A" items often justify perpetual inventory recordkeeping.
D)   ABC systems typically have more than three classes.

Question 20

Which of the following statements is NOT true about vendor managed inventory (VMI) ?

Accepted Answer

A)   VMI is another means of managing inventory.
B)   VMI does not provide suppliers with access to the firm's inventory and forecast data.
C)   VMI requires collaboration between the supplier and the customer in terms of sharing data.
D)   VMI is used in grocery stores for some food items, with the supplier stocking the store. B

Exam 14: Independent Demand Inventory

A large hospital that batches orders for a variety of surgical supplies with its preferred supplier should use a

Correct Answer
verified

At the economic order quantity,

Correct Answer
verified

Correct Answer
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Correct Answer
verified
11ea6f77_6ed5_fb67_b3b4_3b765e49d251_TB2610_00

Determinants of reorder levels (order point quantities) include all of the following EXCEPT

Correct Answer
verified

The average inventory level is defined as the difference between the cycle stock and the safety stock.

Correct Answer
verified

Which of the following statements is INCORRECT regarding the EOQ model?

Correct Answer
verified

Given that unit item cost = $30,annual carrying charge = 15%,annual demand = 3,600 units,and ordering cost = $15 per order,the EOQ

Correct Answer
verified

A paint supplier that places orders for different colors of paint for delivery at the same time should use a

Correct Answer
verified

Correctly complete the following statements.Independent demand and dependent demand differ in that

Correct Answer
verified

Which of the following is correct?

Correct Answer
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Demand for an item is 10 units per week,and delivery lead time is 3 weeks.The safety stock is known to be 11 units.Using a Q system,what is the reorder point (R) ?

Correct Answer
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Which cost defines the cost of capital?

Correct Answer
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Service levels are

Correct Answer
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D

Independent demand inventory consists of

Correct Answer
verified

A smaller lot size would result in fewer orders and increased inventory levels.

Correct Answer
verified

In general,it is extremely difficult to estimate stockout costs and hence we use the desired service levels while computing the reorder points.

Correct Answer
verified

If the actual order quantity Q is much larger than the economic order quantity,

Correct Answer
verified

Which of the following statements about ABC inventory classification schemes is FALSE?

Correct Answer
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Which of the following statements is NOT true about vendor managed inventory (VMI) ?

Correct Answer
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B

Exam 14: Independent Demand Inventory

A large hospital that batches orders for a variety of surgical supplies with its preferred supplier should use a

Correct AnswerverifiedShow Answer

At the economic order quantity,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified11ea6f77_6ed5_fb67_b3b4_3b765e49d251_TB2610_00

Determinants of reorder levels (order point quantities) include all of the following EXCEPT

Correct AnswerverifiedShow Answer

The average inventory level is defined as the difference between the cycle stock and the safety stock.

Correct AnswerverifiedShow Answer

Which of the following statements is INCORRECT regarding the EOQ model?

Correct AnswerverifiedShow Answer

Given that unit item cost = $30,annual carrying charge = 15%,annual demand = 3,600 units,and ordering cost = $15 per order,the EOQ

Correct AnswerverifiedShow Answer

A paint supplier that places orders for different colors of paint for delivery at the same time should use a

Correct AnswerverifiedShow Answer

Correctly complete the following statements.Independent demand and dependent demand differ in that

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Demand for an item is 10 units per week,and delivery lead time is 3 weeks.The safety stock is known to be 11 units.Using a Q system,what is the reorder point (R) ?

Correct AnswerverifiedShow Answer

Which cost defines the cost of capital?

Correct AnswerverifiedShow Answer

Service levels are

Correct AnswerverifiedD

Independent demand inventory consists of

Correct AnswerverifiedShow Answer

A smaller lot size would result in fewer orders and increased inventory levels.

Correct AnswerverifiedShow Answer

In general,it is extremely difficult to estimate stockout costs and hence we use the desired service levels while computing the reorder points.

Correct AnswerverifiedShow Answer

If the actual order quantity Q is much larger than the economic order quantity,

Correct AnswerverifiedShow Answer

Which of the following statements about ABC inventory classification schemes is FALSE?

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true about vendor managed inventory (VMI) ?

Correct AnswerverifiedB

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11ea6f77_6ed5_fb67_b3b4_3b765e49d251_TB2610_00

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D

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B