Question 1

Inspection of goods for quality and quantity upon arrival is part of ordering cost.

Accepted Answer

A) True 
 B)False

Question 2

If,in a single period inventory situation,the probabilities of demand being 1,2,3,or 4 units are .3,.3,.2,and .2,respectively,what is the probability of selling no more than two units?

Accepted Answer

A)   .3
B)   .5
C)   .6
D)   .8
E)   none of theseF) B) and E)
G) A) and E)

Question 3

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

Accepted Answer

A)   Approximately 95 percent of demand between orders will be satisfied.
B)   The probability is 95 percent that all demand over the year will exceed supply.
C)   The probability is 95 percent that all demand over the year will equal supply.
D)   The probability is 95 percent that all demand over the year will not exceed supply.
E)   Approximately 95 percent of demand between orders will be lost.F) C) and D)
G) A) and E)

Question 4

Using the EOQ model,the higher an item's holding costs,the more frequently it will be ordered.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)   0
B)   .33
C)   .50
D)   .67
E)   none of theseF) All of the above
G) None of the above

Question 6

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)   The probability is 95 percent that demand during lead time will not exhaust the inventory.
C)   The probability is 95 percent that demand during lead time will exactly equal the amount on hand at the beginning of lead time.
D)   The probability is 95 percent that demand during lead time will not exceed the amount on hand at the beginning of lead time.
E)   None of the choices.F) A) and E)
G) B) and D)

Question 7

What is not required for distribution requirement planning to establish replenishment schedules between a distribution centre and retail outlets?

Accepted Answer

A)   Demand forecasts at each retailer
B)   Current inventory on hand
C)   Lead times
D)   Holding costs at the distribution centre
E)   Order quantitiesF) D) and E)
G) C) and E)

Question 8

Which of these products would be most likely to involve the use of a single period model for ordering?

Accepted Answer

A)   Gold coins
B)   Hammers
C)   Fresh fish
D)   Calculators
E)   Frozen cornF) C) and D)
G) All of the above

Question 9

Reorder point (ROP)models assume that demand during lead time is composed of a series of dependent daily demands.

Accepted Answer

A) True 
 B)False

Question 10

Annual ordering cost is inversely related to order size,as the size of orders decreases the annual cost of ordering increases.

Accepted Answer

A) True 
 B)False

Question 11

The fixed order interval model requires a continuous monitoring of inventory levels.

Accepted Answer

A) True 
 B)False

Question 12

Without allowing for safety stock,what reorder point should be used to reorder pepperoni?

Accepted Answer

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

Question 13

A distribution centre (DC)that supplies inventory to a network of retail outlets is an example of a multi-echelon inventory management system.

Accepted Answer

A) True 
 B)False

Question 14

In the basic EOQ model,if lead time increases from five to 10 days,the EOQ will:

Accepted Answer

A)   double.
B)   increase, but not double.
C)   decrease by a factor of two.
D)   remain the same.
E)   none of these.F) A) and B)
G) A) and D)

Question 15

Given the same demand,setup/ordering costs,and holding costs,the EPQ will be:

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 EOQ.F) B) and C)
G) B) and D)

Question 16

If she were to order 80 pounds of pepperoni at a time,what would be the 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 E)
G) C) and E)

Question 17

The fixed order interval model requires a larger amount of safety stock than the reorder point (ROP)model for the same risk of a stock-out.

Accepted Answer

A) True 
 B)False

Question 18

If unsold copies must be destroyed and copies sell for $4.00 each,what is the optimum stocking level and its effective service level?

Accepted Answer

Ce = $1.50 Cs = $4.00 - 1.50 =...

Question 19

All of the following are possible reasons for using the fixed order interval model except:

Accepted Answer

A)   that supplier policy encourages use.
B)   that grouping orders of items held in inventory can save in shipping costs.
C)   that the level of safety stock required is lower than with an EOQ/ROP model.
D)   that it is suited to periodic checks of inventory levels rather than continuous monitoring.
E)   that continuous monitoring is not practical.F) A) and B)
G) B) and C)

Question 20

The single-period model for inventory management is well suited for planning orders for perishables.

Accepted Answer

A) True 
 B)False

Exam 12: Inventory Management

If,in a single period inventory situation,the probabilities of demand being 1,2,3,or 4 units are .3,.3,.2,and .2,respectively,what is the probability of selling no more than two units?

Correct AnswerverifiedShow Answer

The fixed order interval model requires a continuous monitoring of inventory levels.

Correct AnswerverifiedShow Answer

Which of these products would be most likely to involve the use of a single period model for ordering?

Correct AnswerverifiedShow Answer

Given the same demand,setup/ordering costs,and holding costs,the EPQ will be:

Correct AnswerverifiedShow Answer

What is not required for distribution requirement planning to establish replenishment schedules between a distribution centre and retail outlets?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Inspection of goods for quality and quantity upon arrival is part of ordering cost.

Correct AnswerverifiedShow Answer

If she were to order 80 pounds of pepperoni at a time,what would be the total daily costs,including the cost of the pepperoni?

Correct AnswerverifiedShow Answer

If unsold copies must be destroyed and copies sell for $4.00 each,what is the optimum stocking level and its effective service level?

Correct AnswerverifiedCe = $1.50 Cs = $4.00 - 1.50 =...View AnswerShow Answer

All of the following are possible reasons for using the fixed order interval model except:

Correct AnswerverifiedShow Answer

A distribution centre (DC)that supplies inventory to a network of retail outlets is an example of a multi-echelon inventory management system.

Correct AnswerverifiedShow Answer

In the basic EOQ model,if lead time increases from five to 10 days,the EOQ will:

Correct AnswerverifiedShow Answer

Annual ordering cost is inversely related to order size,as the size of orders decreases the annual cost of ordering increases.

Correct AnswerverifiedShow Answer

Using the EOQ model,the higher an item's holding costs,the more frequently it will be ordered.

Correct AnswerverifiedShow Answer

Without allowing for safety stock,what reorder point should be used to reorder pepperoni?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Reorder point (ROP)models assume that demand during lead time is composed of a series of dependent daily demands.

Correct AnswerverifiedShow Answer

The fixed order interval model requires a larger amount of safety stock than the reorder point (ROP)model for the same risk of a stock-out.

Correct AnswerverifiedShow Answer

The single-period model for inventory management is well suited for planning orders for perishables.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Ce = $1.50 Cs = $4.00 - 1.50 =...
View Answer

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