Question 1

Annual ordering cost is inversely related to order size.

Accepted Answer

A) True 
 B)False

Question 2

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 length of an order cycle?

Accepted Answer

A)   0 days
B)   0.25 days
C)   3 days
D)   4 days
E)   5 daysF) A) and E)
G) A) and D)

Question 3

Which one of these would not be a factor in determining the reorder point?

Accepted Answer

A)   the EOQ
B)   the lead time
C)   the variability of demand
D)   the demand or usage rate
E)   all are factorsF) B) and C)
G) A) and E)

Question 4

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

Accepted Answer

A) True 
 B)False

Question 5

When to order can be calculated by the ROP and expressed as a quantity.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following is not generally a determinant of the reorder point?

Accepted Answer

A)   rate of demand
B)   length of lead time
C)   lead time variability
D)   stockout risk
E)   purchase costF) A) and C)
G) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

Accepted Answer

A)   foreorder costs
B)   service costs
C)   shortage costs
D)   holding costs
E)   setup costsF) All of the above
G) C) and D)

Question 9

DVD recorders would be an example of independent-demand items.

Accepted Answer

A) True 
 B)False

Question 10

Which is not a true assumption in the basic EOQ model?

Accepted Answer

A)   Each order is received in a single delivery.
B)   Lead time does not vary.
C)   No more than three items are involveD.
D)   Usage rate is constant.
E)   No quantity discounts.F) A) and B)
G) A) and E)

Question 11

EOQ inventory models are basically concerned with the timing of orders.

Accepted Answer

A) True 
 B)False

Question 12

Cycle stock inventory is intended to deal with:

Accepted Answer

A)   excess costs.
B)   shortage costs.
C)   stockouts.
D)   expected demanD.
E)   quantity discounts.F) B) and D)
G) A) and D)

Question 13

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. At what point should she 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 C)
G) A) and E)

Question 14

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?

Accepted Answer

A)   .5
B)   .6
C)   .7
D)   .8
E)   .9F) B) and D)
G) A) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 2.
D)   remain the samE.
E)   increase, but more information is needed to calculate exactly how much.F) C) and D)
G) A) and E)

Question 17

Reorder point models are primarily used for dependent-demand items.

Accepted Answer

A) True 
 B)False

Question 18

The need for safety stocks can be reduced by an operations strategy which:

Accepted Answer

A)   increases lead time.
B)   increases lead time variability.
C)   increases lot sizes.
D)   decreases ordering costs.
E)   decreases lead time variability.F) A) and B)
G) B) and D)

Question 19

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Accepted Answer

A) True 
 B)False

Question 20

Understocking an inventory item is a sure sign of inadequate inventory control.

Accepted Answer

A) True 
 B)False

Exam 18: Inventory Management

When to order can be calculated by the ROP and expressed as a quantity.

Correct Answer
verified

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

Correct Answer
verified

Which one of these would not be a factor in determining the reorder point?

Correct Answer
verified

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

Correct Answer
verified

Which is not a true assumption in the basic EOQ model?

Correct Answer
verified

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?

Correct Answer
verified

Cycle stock inventory is intended to deal with:

Correct Answer
verified

Correct Answer
verified

EOQ inventory models are basically concerned with the timing of orders.

Correct Answer
verified

Annual ordering cost is inversely related to order size.

Correct Answer
verified

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

Correct Answer
verified

The need for safety stocks can be reduced by an operations strategy which:

Correct Answer
verified

DVD recorders would be an example of independent-demand items.

Correct Answer
verified

Correct Answer
verified

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Correct Answer
verified

Reorder point models are primarily used for dependent-demand items.

Correct Answer
verified

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

Correct Answer
verified

Understocking an inventory item is a sure sign of inadequate inventory control.

Correct Answer
verified

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

Correct Answer
verified

Which one of the following is not generally a determinant of the reorder point?

Correct Answer
verified

Exam 18: Inventory Management

When to order can be calculated by the ROP and expressed as a quantity.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of these would not be a factor in determining the reorder point?

Correct AnswerverifiedShow Answer

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

Correct AnswerverifiedShow Answer

Which is not a true assumption in the basic EOQ model?

Correct AnswerverifiedShow Answer

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?

Correct AnswerverifiedShow Answer

Cycle stock inventory is intended to deal with:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

EOQ inventory models are basically concerned with the timing of orders.

Correct AnswerverifiedShow Answer

Annual ordering cost is inversely related to order size.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The need for safety stocks can be reduced by an operations strategy which:

Correct AnswerverifiedShow Answer

DVD recorders would be an example of independent-demand items.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Correct AnswerverifiedShow Answer

Reorder point models are primarily used for dependent-demand items.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Understocking an inventory item is a sure sign of inadequate inventory control.

Correct AnswerverifiedShow Answer

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

Correct AnswerverifiedShow Answer

Which one of the following is not generally a determinant of the reorder point?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified