Question 1

A fixed order quantity/reorder point model for inventory control is usually used with perpetual tracking.

Accepted Answer

A) True 
 B)False

Question 2

In the single period model,the service level is the probability that demand will not exceed the stocking level in any period.

Accepted Answer

A) True 
 B)False

Question 3

Retail stores typically hold three types of inventory:
 raw materials,work-in-process,and finished goods.

Accepted Answer

A) True 
 B)False

Question 4

Given the following information:
Order quantity = 40
Expected demand during lead time = 20 units
σd LT = 10
desired annual service level = .99
Find:
(i)the expected number of units short per cycle
(ii)the required ROP

Accepted Answer

(i)E(z)= Q (1 - SL annual)/s_{d LT} =...

Question 5

Assuming a thirty-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) A) and E)

Question 6

Holding or carrying cost is directly proportional to order size,as order size increases,so does the holding cost.

Accepted Answer

A) True 
 B)False

Question 7

Which one of these would not be a factor in determining the level of the reorder point that includes safety stock?

Accepted Answer

A)   The EOQ.
B)   The lead time.
C)   The variability of demand.
D)   The demand or usage rate.
E)   All of the above are factors.F) A) and E)
G) B) and D)

Question 8

In the quantity discount model,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)   None of the choices.F) A) and D)
G) A) and E)

Question 9

The total cost curve for inventory costs is relatively flat near the EOQ.

Accepted Answer

A) True 
 B)False

Question 10

In the EOQ with quantity discounts model,a graph of the total cost curves will have the same EOQ for each curve.

Accepted Answer

A) True 
 B)False

Question 11

Variability in demand and/or lead time can be compensated for by safety stock.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a suggestion for an inventory storage system?

Accepted Answer

A)   Store heavy or fast-moving items on the floor.
B)   Store obsolete items in the highest locations.
C)   Have the right level of automation.
D)   Have controlled access to the building.
E)   Make sure the storeroom is not cluttered.F) B) and D)
G) All of the above

Question 13

When excess cost is equal to shortage cost in the single period model,the optimum stocking level falls in the center of the demand distribution for the item.

Accepted Answer

A) True 
 B)False

Question 14

The average inventory level and the number of orders per year are inversely related; as one increases,the other decreases.

Accepted Answer

A) True 
 B)False

Question 15

Allocation methods are used by distribution centres (DCs)when they have excess capacity relative to the orders received by the retailers they serve.

Accepted Answer

A) True 
 B)False

Question 16

Given the following data for a particular inventory item:
 
-For the economic order quantity,what is the average inventory level?

Accepted Answer

The answer of Given the following data for a particular...

Question 17

Total cost in the EOQ with quantity discount model is calculated in the same way as it is in the basic EOQ model.

Accepted Answer

A) True 
 B)False

Question 18

Ordering costs are usually expressed as a variable cost equal to a percentage of the total purchase cost of an order.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   Textbooks at a college bookstore.
B)   Parts and components for an assembly plant with high variability in output.
C)   Cards at a gift shop.
D)   Canned peas at a supermarket.
E)   Car batteries at a "big box" retailer.F) A) and B)
G) D) and E)

Question 20

In the EOQ with planned shortages,it is assumed there is no cost is associated with backorders.

Accepted Answer

A) True 
 B)False

Exam 12: Inventory Management

In the EOQ with quantity discounts model,a graph of the total cost curves will have the same EOQ for each curve.

Correct AnswerverifiedShow Answer

In the single period model,the service level is the probability that demand will not exceed the stocking level in any period.

Correct AnswerverifiedShow Answer

In the EOQ with planned shortages,it is assumed there is no cost is associated with backorders.

Correct AnswerverifiedShow Answer

Given the following information: Order quantity = 40 Expected demand during lead time = 20 units σd LT = 10 desired annual service level = .99 Find: (i)the expected number of units short per cycle (ii)the required ROP

Correct Answerverified(i)E(z)= Q (1 - SL annual)/sd LT =...View AnswerShow Answer

Assuming a thirty-day month,if she were to order 6,000 bills at a time,what would be the length of an order cycle?

Correct AnswerverifiedShow Answer

In the quantity discount model,in order for the EOQ of the lowest curve to be optimum,it must:

Correct AnswerverifiedShow Answer

Allocation methods are used by distribution centres (DCs)when they have excess capacity relative to the orders received by the retailers they serve.

Correct AnswerverifiedShow Answer

The total cost curve for inventory costs is relatively flat near the EOQ.

Correct AnswerverifiedShow Answer

Total cost in the EOQ with quantity discount model is calculated in the same way as it is in the basic EOQ model.

Correct AnswerverifiedShow Answer

Ordering costs are usually expressed as a variable cost equal to a percentage of the total purchase cost of an order.

Correct AnswerverifiedShow Answer

Variability in demand and/or lead time can be compensated for by safety stock.

Correct AnswerverifiedShow Answer

Given the following data for a particular inventory item: -For the economic order quantity,what is the average inventory level?

Correct AnswerverifiedShow Answer

A fixed order quantity/reorder point model for inventory control is usually used with perpetual tracking.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When excess cost is equal to shortage cost in the single period model,the optimum stocking level falls in the center of the demand distribution for the item.

Correct AnswerverifiedShow Answer

Which one of these would not be a factor in determining the level of the reorder point that includes safety stock?

Correct AnswerverifiedShow Answer

Holding or carrying cost is directly proportional to order size,as order size increases,so does the holding cost.

Correct AnswerverifiedShow Answer

Which of the following is not a suggestion for an inventory storage system?

Correct AnswerverifiedShow Answer

Retail stores typically hold three types of inventory: raw materials,work-in-process,and finished goods.

Correct AnswerverifiedShow Answer

The average inventory level and the number of orders per year are inversely related; as one increases,the other decreases.

Correct AnswerverifiedShow Answer

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(i)E(z)= Q (1 - SL annual)/s_{d LT} =...
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