Question 1

With the economic order quantity (EOQ) model, the number of orders increases as the order size decreases.

Accepted Answer

A) True 
 B)False

Question 2

Class A items in the ABC classification system require less monitoring and control than Class C items.

Accepted Answer

A) True 
 B)False

Question 3

The Monte Carlo technique selects numbers randomly from a probability distribution for being used in a quantitative model.

Accepted Answer

A) True 
 B)False

Question 4

A buffer added to the inventory on hand during the lead time is

Accepted Answer

A)   the minimum order quantity
B)   safety stock
C)   the reorder point
D)   none of the aboveE) None of the above
F) A) and B)

Question 5

The weekly demand for a company's product follows the probability distribution below:  Use the following random numbers to simulate the product's demand for the next five weeks: 72, 27, 93, 17, 47.
If the first random number interval begins with 1, then the average weekly demand for the simulated five-week period is

Accepted Answer

A)   137.50
B)   140.00
C)   142.50
D)   152.50E) None of the above
F) All of the above

Question 6

The weekly capacity measured in machine hours for a small machine shop follows the probability distribution shown below:  Based on the probability distributions above, the expected value, or average hours of weekly capacity for the machine shop is

Accepted Answer

A)   500 hours
B)   490 hours
C)   480 hours
D)   475 hoursE) All of the above
F) B) and C)

Question 7

Simulation analysis is useful for operational problems that

Accepted Answer

A)   are easy to solve analytically
B)   cannot be solved analytically
C)   require an optimal solution
D)   meet specific analytical criteriaE) A) and B)
F) All of the above

Question 8

Simulations applied to plant layout or assembly line balancing comprise which type of operational problem?

Accepted Answer

A)   queuing
B)   production and manufacturing systems
C)   service operations
D)   waiting lines/serviceE) All of the above
F) B) and D)

Question 9

Buffer inventories provide independence between different stages of the production process.

Accepted Answer

A) True 
 B)False

Question 10

The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead time for the component is 9 days. If a service level of 95% is desired, then the company's safety stock for this component is approximately

Accepted Answer

A)   150 units
B)   247 units
C)   336 units
D)   740 unitsE) B) and D)
F) All of the above

Question 11

A service level of 95% means there is a 0.95 probability

Accepted Answer

A)   of meeting all demand
B)   of a stock-out
C)   that supply will exceed demand
D)   that demand will be met during the lead timeE) A) and D)
F) A) and C)

Question 12

Finished product is an example of a dependent demand item.

Accepted Answer

A) True 
 B)False

Question 13

The time between orders is variable and the order quantity is constant in the periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not an assumption of the EOQ model?

Accepted Answer

A)   Demand is known and constant
B)   No shortages are allowed
C)   Lead time is determined by quantity ordered
D)   Order quantity is received all at onceE) None of the above
F) A) and D)

Question 15

In general, as the order size increases

Accepted Answer

A)   ordering costs decrease and carrying costs increase.
B)   ordering costs increase and carrying costs decrease.
C)   both ordering and carrying costs increase.
D)   both ordering and carrying costs decrease.E) C) and D)
F) A) and D)

Question 16

Simulation is the preferred technique for problems with random variables represented by the probability distributions.

Accepted Answer

A) True 
 B)False

Question 17

Shortage costs are easier to determine than carrying costs or ordering costs.

Accepted Answer

A) True 
 B)False

Question 18

The EOQ model determines the optimal order size that minimizes the sum of carrying cost and shortage costs.

Accepted Answer

A) True 
 B)False

Question 19

The reorder point is the level of inventory that prompts a new order to be placed in a continuous inventory system.

Accepted Answer

A) True 
 B)False

Question 20

A continuous inventory system is also known as a

Accepted Answer

A)   fixed-time period system
B)   fixed-order quantity system
C)   fixed-lead time system
D)   fixed-amount systemE) None of the above
F) A) and B)

Exam 13: Inventory Management

Shortage costs are easier to determine than carrying costs or ordering costs.

Correct Answer
verified

The time between orders is variable and the order quantity is constant in the periodic inventory system.

Correct Answer
verified

Simulation analysis is useful for operational problems that

Correct Answer
verified

Class A items in the ABC classification system require less monitoring and control than Class C items.

Correct Answer
verified

A continuous inventory system is also known as a

Correct Answer
verified

Finished product is an example of a dependent demand item.

Correct Answer
verified

The EOQ model determines the optimal order size that minimizes the sum of carrying cost and shortage costs.

Correct Answer
verified

Simulation is the preferred technique for problems with random variables represented by the probability distributions.

Correct Answer
verified

Simulations applied to plant layout or assembly line balancing comprise which type of operational problem?

Correct Answer
verified

Which of the following is not an assumption of the EOQ model?

Correct Answer
verified

Correct Answer
verified

The reorder point is the level of inventory that prompts a new order to be placed in a continuous inventory system.

Correct Answer
verified

The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead time for the component is 9 days. If a service level of 95% is desired, then the company's safety stock for this component is approximately

Correct Answer
verified

With the economic order quantity (EOQ) model, the number of orders increases as the order size decreases.

Correct Answer
verified

A buffer added to the inventory on hand during the lead time is

Correct Answer
verified

The Monte Carlo technique selects numbers randomly from a probability distribution for being used in a quantitative model.

Correct Answer
verified

The weekly capacity measured in machine hours for a small machine shop follows the probability distribution shown below: Based on the probability distributions above, the expected value, or average hours of weekly capacity for the machine shop is

Correct Answer
verified

In general, as the order size increases

Correct Answer
verified

Buffer inventories provide independence between different stages of the production process.

Correct Answer
verified

A service level of 95% means there is a 0.95 probability

Correct Answer
verified

Exam 13: Inventory Management

Shortage costs are easier to determine than carrying costs or ordering costs.

Correct AnswerverifiedShow Answer

The time between orders is variable and the order quantity is constant in the periodic inventory system.

Correct AnswerverifiedShow Answer

Simulation analysis is useful for operational problems that

Correct AnswerverifiedShow Answer

Class A items in the ABC classification system require less monitoring and control than Class C items.

Correct AnswerverifiedShow Answer

A continuous inventory system is also known as a

Correct AnswerverifiedShow Answer

Finished product is an example of a dependent demand item.

Correct AnswerverifiedShow Answer

The EOQ model determines the optimal order size that minimizes the sum of carrying cost and shortage costs.

Correct AnswerverifiedShow Answer

Simulation is the preferred technique for problems with random variables represented by the probability distributions.

Correct AnswerverifiedShow Answer

Simulations applied to plant layout or assembly line balancing comprise which type of operational problem?

Correct AnswerverifiedShow Answer

Which of the following is not an assumption of the EOQ model?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The reorder point is the level of inventory that prompts a new order to be placed in a continuous inventory system.

Correct AnswerverifiedShow Answer

The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead time for the component is 9 days. If a service level of 95% is desired, then the company's safety stock for this component is approximately

Correct AnswerverifiedShow Answer

With the economic order quantity (EOQ) model, the number of orders increases as the order size decreases.

Correct AnswerverifiedShow Answer

A buffer added to the inventory on hand during the lead time is

Correct AnswerverifiedShow Answer

The Monte Carlo technique selects numbers randomly from a probability distribution for being used in a quantitative model.

Correct AnswerverifiedShow Answer

The weekly capacity measured in machine hours for a small machine shop follows the probability distribution shown below: Based on the probability distributions above, the expected value, or average hours of weekly capacity for the machine shop is

Correct AnswerverifiedShow Answer

In general, as the order size increases

Correct AnswerverifiedShow Answer

Buffer inventories provide independence between different stages of the production process.

Correct AnswerverifiedShow Answer

A service level of 95% means there is a 0.95 probability

Correct AnswerverifiedShow Answer

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