Question 1

________ is the time between placement and receipt of an order.

Accepted Answer

The answer of ________ is the time between placement and...

Question 2

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Accepted Answer

A) True 
 B)False

Question 3

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then ________ is variable and ________ is constant.

Accepted Answer

The answer of If a safety stock problem includes parameters...

Question 4

A local club is selling Christmas trees and deciding how many to stock for the month of December.If demand is normally distributed with a mean of 100 and standard deviation of 20,trees have no salvage value at the end of the month,trees cost $20,and trees sell for $50 what is the service level?

Accepted Answer

A)  .60
B)  .20
C)  .84
D)  .40
E)  unable to determine given the above information

Question 5

Demand for a product is relatively constant at five units per day.Lead time for this product is normally distributed with a mean of ten days and a standard deviation of three days.
(a)What reorder point provides a 50 percent service level?
(b)What reorder point provides a 90 percent service level?
(c)If the lead time standard deviation can be reduced from 3 days to 1,what reorder point now provides 90 percent service? How much is safety stock reduced by this change?

Accepted Answer

This problem requires formula 12-16 sinc...

Question 6

An organization has had a policy of ordering 70 units at a time.Their annual demand is 340 units,and the item has an annual carrying cost of $2.The assumptions of the EOQ are thought to apply.For what value of ordering cost would this order size be optimal?

Accepted Answer

Start with the econo...

Question 7

If setup costs are reduced by substantial reductions in setup time,the production order quantity is also reduced.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT one of the four main types of inventory?

Accepted Answer

A)  raw material inventory
B)  work-in-process inventory
C)  maintenance/repair/operating supply inventory
D)  safety stock inventory
E)  finished-goods inventory

Question 9

Which of the following statements about quantity discounts is FALSE?

Accepted Answer

A)  The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs.
B)  In inventory management,item cost becomes relevant to order quantity decisions when a quantity discount is available.
C)  If carrying costs are expressed as a percentage of value,EOQ is larger at each lower price in the discount schedule.
D)  The larger the annual demand,the less attractive a discount schedule will be.
E)  The smaller the ordering cost,the less attractive a discount schedule will be.

Question 10

The main trait of a single-period model is that:

Accepted Answer

A)  inventory has limited value after a certain period of time.
B)  it has the largest EOQ sizes.
C)  the order quantity should usually equal the expected value of demand.
D)  supply is limited.
E)  the cost of a shortage cannot be determined accurately.

Question 11

Which of the following would NOT generally be a motive for a firm to hold inventories?

Accepted Answer

A)  to decouple various parts of the production process
B)  to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand
C)  to take advantage of quantity discounts
D)  to minimize holding costs
E)  to hedge against inflation

Question 12

The soft goods department of a large department store sells 175 units per month of a certain large bath towel.The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00.The store uses an inventory carrying charge of I = 27% per year.Determine (a)the optimal order quantity, (b)the order frequency,and (c)the annual holding and setup cost.If,through automation of the purchasing process,the ordering cost can be cut to $4.00,what will be (d)the new economic order quantity, (e)the order frequency,and (f)annual holding and setup costs? Explain these results.

Accepted Answer

Annual demand is 175 × 12 = 2100.
(a)Q* ...

Question 13

What are the assumptions of the EOQ model?

Accepted Answer

(1)Demand for an item is known,reasonabl...

Question 14

In the basic EOQ model,if D = 6000 per year,S = $100,and holding cost = $5 per unit per month,what is the economic order quantity?

Accepted Answer

A)  24
B)  100
C)  141
D)  490
E)  600

Question 15

The Winfield Distributing Company has maintained an 80% service level policy for inventory of string trimmers.Mean demand during lead time is 170 trimmers,and the standard deviation during lead time is 60 trimmers.The annual cost of carrying one trimmer in inventory is $6.The area sales people have recently told Winfield's management that they could expect a $400 improvement in profit (based on current figures of cost per trimmer)if the service level were increased to 99%.Is it worthwhile for Winfield to make this change?

Accepted Answer

This is solved with a cost comparison: t...

Question 16

Which of the following items is mostly likely managed using a single-period order model?

Accepted Answer

A)  Christmas trees
B)  canned food at the grocery store
C)  automobiles at a dealership
D)  metal for a manufacturing process
E)  gas sold to a gas station

Question 17

How sensitive is the EOQ to variations in demand or costs?

Accepted Answer

The EOQ is relatively insensitive to sma...

Question 18

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The EOQ model is appropriate.The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs.

Accepted Answer

A)  $400
B)  $800
C)  $1200
D)  Zero;this is a class C item.
E)  Cannot be determined because the unit price is not known.

Question 19

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division.Perform ABC analysis on the data.Which products do you suggest the firm keep the tightest control over? Explain.

Accepted Answer

R11 and U44 represent over 80% of the fi...

Question 20

When quantity discounts are allowed,the cost-minimizing order quantity:

Accepted Answer

A)  is always an EOQ quantity.
B)  minimizes the sum of holding and ordering costs.
C)  minimizes the unit purchase price.
D)  may be a quantity below that at which one qualifies for that price.
E)  minimizes the sum of holding,ordering,and product costs.

Exam 12: Inventory Management

Correct Answer
verified
This is solved with a cost comparison: t...
View Answer

Correct Answer
verified
Annual demand is 175 × 12 = 2100.
(a)Q* ...
View Answer

How sensitive is the EOQ to variations in demand or costs?

Correct Answer
verified
The EOQ is relatively insensitive to sma...
View Answer

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The EOQ model is appropriate.The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs.

Correct Answer
verified

________ is the time between placement and receipt of an order.

Correct Answer
verified

What are the assumptions of the EOQ model?

Correct Answer
verified
(1)Demand for an item is known,reasonabl...
View Answer

Which of the following items is mostly likely managed using a single-period order model?

Correct Answer
verified

If setup costs are reduced by substantial reductions in setup time,the production order quantity is also reduced.

Correct Answer
verified

Correct Answer
verified
This problem requires formula 12-16 sinc...
View Answer

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Correct Answer
verified

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division.Perform ABC analysis on the data.Which products do you suggest the firm keep the tightest control over? Explain.

Correct Answer
verified
R11 and U44 represent over 80% of the fi...
View Answer

The main trait of a single-period model is that:

Correct Answer
verified

Which of the following is NOT one of the four main types of inventory?

Correct Answer
verified

Which of the following would NOT generally be a motive for a firm to hold inventories?

Correct Answer
verified

Which of the following statements about quantity discounts is FALSE?

Correct Answer
verified

A local club is selling Christmas trees and deciding how many to stock for the month of December.If demand is normally distributed with a mean of 100 and standard deviation of 20,trees have no salvage value at the end of the month,trees cost $20,and trees sell for $50 what is the service level?

Correct Answer
verified

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then is variable and is constant.

Correct Answer
verified

In the basic EOQ model,if D = 6000 per year,S = $100,and holding cost = $5 per unit per month,what is the economic order quantity?

Correct Answer
verified

An organization has had a policy of ordering 70 units at a time.Their annual demand is 340 units,and the item has an annual carrying cost of $2.The assumptions of the EOQ are thought to apply.For what value of ordering cost would this order size be optimal?

Correct Answer
verified
Start with the econo...
View Answer

When quantity discounts are allowed,the cost-minimizing order quantity:

Correct Answer
verified

Exam 12: Inventory Management

Correct AnswerverifiedThis is solved with a cost comparison: t...View AnswerShow Answer

Correct AnswerverifiedAnnual demand is 175 × 12 = 2100.(a)Q* ...View AnswerShow Answer

How sensitive is the EOQ to variations in demand or costs?

Correct AnswerverifiedThe EOQ is relatively insensitive to sma...View AnswerShow Answer

A product has a demand of 4000 units per year.Ordering cost is $20,and holding cost is $4 per unit per year.The EOQ model is appropriate.The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs.

Correct AnswerverifiedShow Answer

________ is the time between placement and receipt of an order.

Correct AnswerverifiedShow Answer

What are the assumptions of the EOQ model?

Correct Answerverified(1)Demand for an item is known,reasonabl...View AnswerShow Answer

Which of the following items is mostly likely managed using a single-period order model?

Correct AnswerverifiedShow Answer

If setup costs are reduced by substantial reductions in setup time,the production order quantity is also reduced.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThis problem requires formula 12-16 sinc...View AnswerShow Answer

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

Correct AnswerverifiedShow Answer

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division.Perform ABC analysis on the data.Which products do you suggest the firm keep the tightest control over? Explain.

Correct AnswerverifiedR11 and U44 represent over 80% of the fi...View AnswerShow Answer

The main trait of a single-period model is that:

Correct AnswerverifiedShow Answer

Which of the following is NOT one of the four main types of inventory?

Correct AnswerverifiedShow Answer

Which of the following would NOT generally be a motive for a firm to hold inventories?

Correct AnswerverifiedShow Answer

Which of the following statements about quantity discounts is FALSE?

Correct AnswerverifiedShow Answer

A local club is selling Christmas trees and deciding how many to stock for the month of December.If demand is normally distributed with a mean of 100 and standard deviation of 20,trees have no salvage value at the end of the month,trees cost $20,and trees sell for $50 what is the service level?

Correct AnswerverifiedShow Answer

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then ________ is variable and ________ is constant.

Correct AnswerverifiedShow Answer

In the basic EOQ model,if D = 6000 per year,S = $100,and holding cost = $5 per unit per month,what is the economic order quantity?

Correct AnswerverifiedShow Answer

An organization has had a policy of ordering 70 units at a time.Their annual demand is 340 units,and the item has an annual carrying cost of $2.The assumptions of the EOQ are thought to apply.For what value of ordering cost would this order size be optimal?

Correct AnswerverifiedStart with the econo...View AnswerShow Answer

When quantity discounts are allowed,the cost-minimizing order quantity:

Correct AnswerverifiedShow Answer

Correct Answer
verified
This is solved with a cost comparison: t...
View Answer

Correct Answer
verified
Annual demand is 175 × 12 = 2100.
(a)Q* ...
View Answer

Correct Answer
verified
The EOQ is relatively insensitive to sma...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(1)Demand for an item is known,reasonabl...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
This problem requires formula 12-16 sinc...
View Answer

Correct Answer
verified

Correct Answer
verified
R11 and U44 represent over 80% of the fi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If a safety stock problem includes parameters for average daily demand,standard deviation of demand,and lead time,then is variable and is constant.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Start with the econo...
View Answer

Correct Answer
verified