Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Business Development
Q:
(p. 373) Safety stock is not necessary in any fixed-time period system.
Q:
(p. 373) The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.
Q:
(p. 365) Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.
Q:
(p. 373) Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.
Q:
(p. 370) The key difference between a fixed-order quantity inventory model, where demand is known and one where demand is uncertain is in computing the reorder point.
Q:
(p. 370) Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.
Q:
(p. 369) If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.
Q:
(p. 368) Safety stock can be defined as the amount of inventory carried in addition to the expected demand.
Q:
(p. 369) Using the probability approach we assume that the demand over a period of time is normally distributed.
Q:
(p. 366) The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.
Q:
(p. 365) Fixed-order quantity inventory systems determine the reorder point, R and the order quantity, Q values.
Q:
(p. 364) Fixed-time period inventory models are "time triggered."
Q:
(p. 364) Fixed-time period inventory models are "event triggered."
Q:
(p. 364) Fixed-order quantity inventory models are "time triggered."
Q:
(p. 364) Fixed-order quantity inventory models are "event triggered."
Q:
(p. 365) The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.
Q:
(p. 364) The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.
Q:
(p. 364) The fixed-order quantity inventory model favors less expensive items because average inventory is lower.
Q:
(p. 364) The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.
Q:
(p. 360) Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.
Q:
(p. 359) Shortage costs are precise and easy to measure.
Q:
(p. 358) If the cost to change from producing one product to producing another were zero the lot size would be very small.
Q:
(p. 358) In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
Q:
(p. 358) In inventory models, high holding costs tend to favor high inventory levels.
Q:
(p. 357) One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.
Q:
(p. 357) One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.
Q:
(p. 357) One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.
Q:
(p. 357) An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.
Q:
(p. 357) Inventory is defined as the stock of any item or resource used in an organization.
Q:
(p. 359) Distinguish between dependent and independent demand. How are these demands treated differently?
Q:
(p. 381) What is the name of a physical inventory-taking technique that focuses only on certain items and counts more often than once or twice a year? ______________________________________
Q:
(p. 358) In making any decision that affects the size of inventory, what are the four categories of cost that must be considered?
Q:
(p. 357) What are the five purposes of inventory?
Q:
(p. 371) If it takes a supplier 10 days to deliver an order once it has been placed and the standard deviation of daily demand is 14, what is the standard deviation of usage during lead time? _________________________________________
Q:
(p. 367) Using the fixed-order quantity model, what is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $40 and a holding cost per unit per year of $45? ______________________________________________
Q:
(p. 373) Using the fixed-time period inventory model, and given an average daily demand of 300 units, 4 days between inventory reviews, 5 days for lead time, 1,200 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 12 units, what quantity should be ordered? ________________________
Q:
(p. 367) If annual demand is 8,000 units, the ordering cost is $20 per order and the holding cost is $12.50 per unit per year, what is the optimal order quantity using the fixed-order quantity inventory model? _____________________________________
Q:
(p. 367) Assuming no safety stock, what is the reorder point (R) given an average daily demand of 100 units and a lead time of 5 days? __________________________________
Q:
(p. 360) What is the term for there being no relationship between demands for various items? _____________________________________
Q:
(p. 382) Computer inventory systems are often programmed to produce a cycle count notice in which of the following case? A. When the record shows a near maximum balance on hand B. When the record shows positive balance but a backorder was written C. When quality problems have been discovered with the item D. When the item has become obsolete E. When the item has been misplaced in the stockroom
Q:
(p. 369) Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?
A. 1.64
B. 1.96
C. 2.05
D. 2.30
E. None of the above
Q:
(p. 379) Using the ABC classification system for inventory, which of the following is a true statement?
A. The "C" items are of moderate dollar volume
B. You should allocate about 50 % of the dollar volume to "B" items
C. The "A" items are of low dollar volume
D. The "A" items are of high dollar volume
E. Inexpensive and low usage items are classified as "C" no matter how critical
Q:
(p. 379) Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?
A. A items get 15%, B items get 35%, and C items get 50%
B. A items get 15%, B items get 45%, and C items get 40%
C. A items get 25%, B items get 35%, and C items get 40%
D. A items get 25%, B items get 15%, and C items get 60%
E. A items get 20%, B items get 30%, and C items get 50%
Q:
(p. 379) The Pareto principle is best applied to which of the following inventory systems?
A. EOQ
B. Fixed-time period
C. ABC classification
D. Fixed-order quantity
E. Single-period ordering system
Q:
(p. 362) If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $120 and the loss resulting from that unit if it is not sold (Co) is $360, which of the following is the probability of the last unit being sold?
A. Greater than 0.90
B. Greater than 0.85
C. Greater than 0.75
D. Greater than 0.25
E. None of the above
Q:
(p. 362) If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $0.90 and the loss resulting from that unit if it is not sold (Co) is $0.50, which of the following is the probability of the last unit being sold?
A. Greater than 0.357
B. Greater than 0.400
C. Greater than 0.556
D. Greater than 0.678
E. None of the above
Q:
(p. 374) You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 10 days and the number of days between reviews is 15. Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10?
A. 25
B. 40
C. 50
D. 73
E. 100
Q:
(p. 374) You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?
A. About 27.7
B. About 32.8
C. About 35.8
D. About 39.9
E. About 45.0
Q:
(p. 374) Using the fixed-time period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity?
A. About 30.4
B. About 36.3
C. About 42.3
D. About 56.8
E. About 59.8
Q:
(p. 373) Using the fixed-time period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity?
A. 863
B. 948
C. 1,044
D. 1,178
E. 4,510
Q:
(p. 373) Using the fixed-time period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity?
A. About 1,086
B. About 1,686
C. About 1,806
D. About 2,206
E. About 2,686
Q:
(p. 373) Which of the following is not necessary to compute the order quantity using the fixed-time period model with safety stock? A. Forecast average daily demand B. Safety stock C. Inventory currently on hand D. Ordering cost E. Lead time in days
Q:
(p. 370) A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days, and the standard deviation of usage during lead time is 2, which of the following is the desired value of R?
A. About 17.9
B. About 19.7
C. About 24.0
D. About 27.3
E. About 31.2
Q:
(p. 370) A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired "z" value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R?
A. About 6
B. About 16
C. About 61
D. About 66
E. About 79
Q:
(p. 371) If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?
A. About 2.16
B. About 3.06
C. About 4.66
D. About 5.34
E. About 9.30
Q:
(p. 371) If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?
A. 50
B. 100
C. 400
D. 1,000
E. 1,600
Q:
(p. 371) If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time?
A. 10
B. 20
C. 40
D. 100
E. 400
Q:
(p. 371) In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first?
A. Standard deviation of daily demand
B. Number of standard deviations for a specific service probability
C. Stockout cost
D. Economic order quantity
E. Safety stock level
Q:
(p. 371) To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R?
A. The product of average daily demand times a standard deviation of lead time
B. A "z" value times the lead time in days
C. The standard deviation of vendor lead time times the standard deviation of demand
D. The product of lead time in days times the standard deviation of lead time
E. The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.
Q:
(p. 369) Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?
A. 1.28
B. 1.64
C. 1.96
D. 2.00
E. 2.18
Q:
(p. 367) A company has recorded the last six days of daily demand on a single product they sell. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
A. 540
B. 270
C. 115
D. 90
E. 60
Q:
(p. 367) A company has recorded the last five days of daily demand on their only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
A. 120
B. 126
C. 630
D. 950
E. 1,200
Q:
(p. 366) A company is planning for its financing needs and uses the basic fixed-order quantity inventory model. Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000, setup cost of $32, a holding cost per unit per year of $4, an EOQ of 400 units, and a cost per unit of inventory of $150?
A. $1,501,600
B. $1,498,200
C. $500,687
D. $499,313
E. None of the above
Q:
(p. 367) Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80 and a holding cost per unit per year of $4?
A. $849
B. $1,200
C. $1,889
D. $2,267
E. $2,400
Q:
(p. 367) If annual demand is 35,000 units, the ordering cost is $50 per order and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?
A. 5,060
B. 2,320
C. 2,133
D. 2,004
E. 1,866
Q:
(p. 367) If annual demand is 50,000 units, the ordering cost is $25 per order and the holding cost is $5 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?
A. 909
B. 707
C. 634
D. 500
E. 141
Q:
(p. 367) If annual demand is 12,000 units, the ordering cost is $6 per order and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?
A. 576
B. 240
C. 120.4
D. 60.56
E. 56.03
Q:
(p. 367) Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?
A. 421
B. 234
C. 78
D. 26
E. 312
Q:
(p. 367) Assuming no safety stock, what is the re-order point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand?
A. 550
B. 500
C. 715
D. 450
E. 475
Q:
(p. 366) Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function?
A. Annual purchasing cost, annual ordering cost, fixed cost
B. Annual holding cost, annual ordering cost, unit cost
C. Annual holding cost, annual ordering cost, annual purchasing cost
D. Annual lead time cost, annual holding cost, annual purchasing cost
E. Annual unit cost, annual set up cost, annual purchasing cost
Q:
(p. 367) Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model?
A. C
B. TC
C. H
D. Q
E. S
Q:
(p. 366) Which of the following is not an assumption of the basic fixed-order quantity inventory model? A. Ordering or setup costs are constant B. Inventory holding cost is based on average inventory C. Diminishing returns to scale of holding inventory D. Lead time is constant E. Demand for the product is uniform throughout the period
Q:
(p. 366) Which of the following is an assumption of the basic fixed-order quantity inventory model? A. Lead times are averaged B. Ordering costs are variable C. Price per unit of product is constant D. Back orders are allowed E. Stock-out costs are high
Q:
(p. 364) Which of the following is a perpetual system for inventory management?
A. Fixed-time period
B. Fixed-order quantity
C. P model
D. First-in-first-out
E. The wheel of inventory
Q:
(p. 364) Which of the following are fixed-time period inventory models?
A. The EOQ model
B. The least cost method
C. The Q model
D. Periodic system model
E. Just-in-time model
Q:
(p. 364) Which of the following are fixed-order quantity inventory models?
A. Economic order quantity model
B. The ABC model
C. Periodic replenishment model
D. Cycle counting model
E. P model
Q:
(p. 358) In making any decision that affects inventory size, which of the following costs do not need to be considered? A. Holding costs B. Setup costs C. Ordering costs D. Fixed costs E. Shortage costs
Q:
(p. 358) Which of the following is usually included as an inventory holding cost?
A. Order placing
B. Breakage
C. Typing up an order
D. Quantity discounts
E. Annualized cost of materials
Q:
(p. 358) Which of the following is not included as an inventory holding cost?
A. Annualized cost of materials
B. Handling
C. Insurance
D. Pilferage
E. Storage facilities
Q:
(p. 358) When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?
A. Normal variation in shipping time
B. A shortage of material at the vendor's plant causing backlogs
C. An unexpected strike at the vendor's plant
D. A lost order
E. Redundant ordering systems