FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Inventory Management

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is not true for the economic production quantity model?

A) Usage rate is constant.
B) Production rate exceeds usage rate.
C) Run size exceeds maximum inventory.
D) There are no ordering or setup costs.
E) Average inventory is one-half maximum inventory.

F) None of the above
G) A) and E)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

A) 20.
B) square root of 200.
C) 200.
D) 400.
E) 600.

F) B) and D)
G) D) and E)

Correct Answer

verified

Show Answer

Question 23

True/False

Review LaterAdd Note

The inventory value of the supply chain exceeds the inventory value of the organization's work-in-process inventory.

The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs) . Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer. If he were to order 16 cases of Stein beer at a time, what would be the average daily total inventory costs, EXCLUDING the cost of the beer?

The single-period model can be very helpful in determining how much to order.

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

Which of the following is typically the largest of all inventory costs?

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

Safety stock eliminates all stockouts.

In the single-period model, if excess cost is double the shortage cost, the approximate stockout risk, assuming an optimum service level, is ___ percent.

In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. At what point should resin be reordered?

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the maximum inventory would be approximately:

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

The calculation of safety stock requires knowledge of demand and lead time variability.

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as:

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:

In the fixed-order-interval model, the order size is the same for each order.

One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

Cycle counting can be used in motorcycle inventory control.