BUAD 3020 Ch.11 SB

In cycle counting, the accuracy level recommended by experts for "B" items is +/- 0.1% 5% 2% 1%

1%

Firm ABC has an annual demand for 2,000 widgets. Their typical order quantity is 400 units and they maintain a safety stock of 50 units. What is their average inventory? 1050 400 5 250

250 Average inventory = quantity/2 + SS = 400/2+50 = 250

Which of the following is NOT a component of total cost in a fixed-quantity inventory system? Annual purchasing cost Annual ordering cost Annual holding cost Average stocking cost

Average stocking cost

Demand is termed as independent if it comes from sources _______ to the firm and is not related to other _________

Blank 1: external or outside Blank 2: products, parts, product, or items

Typically when using ABC classification, the low dollar value, or measure of importance, items are in group ______, while high dollar value items are in group _______.

C, A

_________ inventory includes items in-transit or at a warehouse ready for shipment to the customer.

Distribution

Which of the following highlights a dependent demand scenario? Four tires that are needed to complete the assembly of a car Flowers purchased at a garden center Gallons of milk purchased at a grocery store Smart phones purchased at a retailer

Four tires that are needed to complete the assembly of a car

A fixed-time period inventory model carries a ________ level of safety stock than a fixed-order quantity system.

Higher

________ is the stock of any item or resource used in an organization.

Inventory

________ turn is the ratio of costs of goods sold to average inventory value.

Inventory

The time between placing an order and receiving the item(s) is called the

Lead Time

Select all that apply Which of the following is influenced by the customer order decoupling point? Quality system Supplier base Lead time Inventory investment

Lead time Inventory investment

If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model? LIFO Periodic Fixed-order quantity Single-period

Single-period

Southern Printing Corp. produces high-end booklets for university graduations listing all the participating students at a given university. What inventory model would Southern use to optimize the amount of booklet inventory produced for each graduation?

Single-period

Which of the following is the correct total annual cost equation?

TC = DC + (D/Q)s + (Q/2)H

A single-period ________ model helps in situations where a company is trying to produce the optimal quantity of inventory for a single event, minimizing overproduction costs and potential lost revenues.

inventory

Work-in-process is considered a part of ________ inventory.

manufacturing

To determine the probability of stocking out over the time period, we can simply plot a __________ distribution for the expected demand and note where the amount we have on-hand lies on the curve.

normal

Safety stock inventory levels are determined by the _______ of stock out at a given desired service level.

probability

Acme Company carries an additional level of inventory beyond the expected demand during reorder lead times. This additional inventory is known as raw material. just-in-case supplies. safety stock. backorder stock.

safety stock.

In ________ inventory generally refers to the tangible goods to be sold and the supplies necessary to administer the service.

service

When placing an order for a single period, the order quantity should be increased as long as

the probability of selling what is ordered is less than or equal to Cu/Cu+Co

In constructing any inventory model, there has to be a functional relationship between the annual demand and lead time in days. variable of interest and the measure of effectiveness. average product costs and average daily lead time. order cycle time and transportation costs.

variable of interest and the measure of effectiveness.

When price varies with the order size, the first step in the analysis process is to -determine if the extreme prices are acceptable to management. -sort the prices from lowest to highest and calculate the EOQ for each price level. -choose the highest price level and determine if the EOQ is feasible. -sort the prices from highest to lowest and calculate the EOQ for each price level.

-sort the prices from lowest to highest and calculate the EOQ for each price level.

In cycle counting, the accuracy level recommended by experts for "A" items is +/- 1%. 2.5%. 0.2%. 5%.

0.2%

In inventory management, the Pareto principle suggests that _______ % of the items account for _____ % of the total inventory cost.

20, 80

In the ABC approach, B items account for approximately _______ % of the items in inventory

35

The z-score associated with a ________ percent probability of not stocking out is 1.64.

95

Click and drag on elements in order From highest percentage to lowest percentage, rank the ABC categories in terms of value of items in inventory: C items B items A items

A B C

Which category of inventory is managed most closely by the firm? C items No items All items are managed the same A items

A items

Select all that apply Which categories of inventory typically go through a cycle count? No items "D" items "A" items "C" items "B" items

A items B items C items

Select all that apply Computer cycle counting programs can produce a cycle count notice after which events? A positive balance but a backorder was created A specified level of activity A zero balance on-hand When raw material prices drop

A positive balance but a backorder was created A specified level of activity A zero balance on-hand

Select all that apply Which of the following is/are components of total annual costs in a fixed-quantity inventory system? Annual marketing costs Annual production labor costs Annual purchase costs Annual ordering costs Annual holding costs

Annual holding costs Annual ordering costs Annual purchase costs

In fixed-order quantity systems, the amount of inventory that minimizes total costs is called the _______ ________ ________

Blank 1: optimal or optimal Blank 2: order or order Blank 3: quantity or quantity

Which of the following is not considered when calculating the order quantity in a fixed-time period model? Lead time Inventory currently on-hand Current stock at the supplier Standard deviation of demand over the review and lead time

Current stock at the supplier

Fixed-time period is an inventory control method where firms place orders periodically, but the order quantity is ______ every time. different determined by wholesale prices the same determined by stock prices

Different

The assumptions regarding the model on which the optimal order quantity is derived are all very applicable in real world scenarios.

False

True or False The assumptions regarding the model on which the optimal order quantity is derived are all very applicable in real world scenarios.

False

Which of the following is considered distribution inventory? Work-in-process inventory Raw material inventory awaiting a machining operation Finished goods at a department store waiting to be sold Finished goods inventory in a distribution center

Finished goods inventory in a distribution center

________ -order quantity models attempt to determine the specific point, at which an order will be placed and the size of that order.

Fixed

Which multiperiod inventory system is used for high-priced or critical items? Fixed-order quantity Optimal-cost Single-period Fixed-time period

Fixed-order quantity

XYZ Company uses an inventory model where the amount requisitioned is fixed and ordering is triggered by inventory dropping to a specified level. What type of inventory system is XYZ using? Perpetual Single-period Fixed-order quantity First In - First Out (FIFO)

Fixed-order quantity

Which inventory system requires continuous monitoring of inventory levels? Time to maintain systems Single period system Fixed-order quantity system Fixed-time period system

Fixed-order quantity system

Which of the following is also called a periodic review system? Perpetual Single-period Fixed-order quantity Fixed-time period

Fixed-time period

Campbell's Soup makes products for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as Blank______ demand. dependent marketing independent forecasted

Independent

Mastertech Furniture Company makes chairs. When Walmart orders finished chairs from Mastertech, it creates what type of demand on inventory? Make-to-order Rapid replenishment Independent Dependent

Independent

Match the advantages of inventory with their definitions.

Maintain independence of operations matches, Allow the work center flexibility to work without undue influence from other work centers Meet variation in product demand matches, Acts as a buffer to absorb unexpected periods of high demand Take advantage of economic purchase order size matches, Order larger quantities to reduce shipping, receiving, and clerical costs Accommodate variability in raw material delivery time matches, Provide a buffer to absorb unexpected shortages or disruptions from vendors

According to the inventory control system matrix, if a company has highly independent products and high transaction costs, it is likely to deploy what type inventory control process? Reorder point Materials requirements planning Manual two-bin Rate-based synchronous systems

Manual two-bin

The managerial and clerical costs to prepare purchase or production orders are called holding costs. shortage costs. logistics costs. ordering costs.

Ordering Costs

The logic of the few having the greatest importance and the many having little importance is termed the ________ principle.

Pareto

Select All that apply Which of the following is a form of inventory? Parts waiting to be assembled Raw material held in a warehouse Money owed to a firm by its customers Finished products held in a warehouse

Parts waiting to be assembled Raw material held in a warehouse Finished products held in a warehouse

Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely using to arrive at this decision? Time-period Inventory turns Cycle count Price break

Price Break

________stock can be defined as the amount of inventory carried in addition to the expected demand.

Safety

Which of the following is not a cost associated with inventory management? Shortage costs Holding costs Transportation costs Set up costs

Transportation costs

True or False: A fixed-order quantity model is triggered by inventory dropping to a specified level.

True

True or False: The second step in the price-break model may not be necessary if the first feasible economic order quantity is the lowest price.

True

True or False: When analyzing a price-break model, it is possible that the economic order quantity that is calculated is either higher or lower than the range to which the price corresponds.

True

True or False: When safety stock is expected to be on-hand, the average inventory value calculation is (Q/2 + SS)C.

True

True or false: The economic order quantity depends upon three factors: the annual demand, the setup cost, and the annual holding cost of one unit of inventory.

True

True or false: The order quantity in a fixed-order quantity model is the same, regardless if demand is known or uncertain.

True

True or false: When a vendor makes routine visits to a firm to take orders, a fixed-time period model may be a good choice.

True

Which of the following is a policy and control of an inventory system? When stock should be replenished The payment terms associated with buying the stock from vendors How one will finance the stock Who should order the stock

When stock should be replenished

Select all that apply Which of the following is/are manufacturing inventory items? Work-in-process In-transit supplies Finished products Component parts in manufacturing

Work-in-process Finished products Component parts in manufacturing

Fixed-order quantity models assume there is ______ tracking of inventory.

continual

To calculate the reorder point for a fixed-order quantity model with safety stock, all of the following are required except average daily demand. lead time in days. current inventory level standard deviation of usage during lead time.

current inventory level.

When the number of needed items are computed based on the number of higher-level items produced, one is operating in a(n) ________ demand environment.

dependent

The economic order quantity (Qopt) occurs when the annual ordering and holding costs are ______

equal

If Acme groceries wanted a 0.95 probability of not stocking out, the "z" value that would be used in the calculation to find the safety stock is equal to the number of days lead time. equal to 1.64, located in the z chart. equal to 30 days of lead time. equal to 0.95 located in the z chart.

equal to 1.64, located in the z chart.

If manufacturing equipment within a facility produces at different rates, one can use inventory to maintain _________ of operations.

independence or flexibility

Transaction cost is dependent on the level of ______ incorporated into the control system matrix. integration and automation silos and automation integration and manual implementation technology and economies of scale

integration and automation

The set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be is called a(n) _______ system.

inventory

The current amount of inventory (on-hand quantity plus on-order minus backordered) is known as the inventory demand. inventory level. inventory available. inventory position.

inventory position.

n a fixed-time period inventory model, the average demand over the vulnerable period depends on the review cycle (T) and the constant _____ time (L).

lead

In a fixed-time period system, inventory monitoring happens _______ frequently than in a fixed-order quantity system.

less

In a single period model, Co represents the cost per unit associated with ______ the estimating of demand.

over

Inventory ________ is defined as the on-hand plus on-order minus backordered quantities

position

A fixed-order _______ model uses a reorder point, R, to trigger an order of an optimal amount of product, labeled Q.

quantity

The key difference between a fixed-order quantity model where demand is known and one where demand is uncertain is in computing the ______ point

reorder

A price-break model suggests that the _______ price of an item varies with order _______

selling, quantity

Overbooking of airline flights is an example of a business scenario where _______ -period inventory models may be appropriately used.

single

In services, inventory generally refers to any ________ good and the _________ necessary to administer the service.

tangible, supplies

Inventory turn is a key measure for a business and directly relates to the price paid for raw materials. the quality of management. the financial performance of the firm. the supply chain manager's performance.

the financial performance of the firm.

When calculating the reorder point for a fixed-quantity model with safety stock, the value "z" represents the expected number of stock outs each period. the number of standard deviations associated with a given service probability. the average daily demand. the standard deviation of demand during the lead time.

the number of standard deviations associated with a given service probability.

The fixed-time period models are ________triggered while the fixed-order quantity models are ______ triggered.

time; event

The sum of annual purchasing costs, annual ordering costs, and annual holding costs is known as the total order cost. total inventory cost. annual product cost. total annual cost.

total annual cost.