ISDS Final Exam Quiz Concepts
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A. more than 40 B. about 18 C. about 32 D. about 24 E. about 38
A
In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A. increase by about 41%. B. increase, but more data is needed to say by how much. C. increase by 200%. D. increase by 100%. E. either increase or decrease.
A
The proper quantity of safety stock is typically determined by: A. setting the level of safety stock so that a given stockout risk is not exceeded. B. carrying sufficient safety stock so as to eliminate all stockouts. C. multiplying the EOQ by the desired service level. D. minimizing total costs. E. using a single-period model.
A
Which of the following statements regarding big data is FALSE? A. Data collection is so massive that it is now measured in gigabytes. B. Walmart's databases contain more than 2.5 petabytes. C. One terabyte equals approximately one trillion bytes. D. Big data requires sophistication in how it is stored, processed, and analyzed. E. Digital data can be collected from web sites, credit cards, point-of-sale records, social media, and operational environments.
A
A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 750 units. What is the average inventory for this problem? A. 300 B. 245 C. 61 D. 600 E. 375
A. 300
Which of the following would NOT reduce the bullwhip effect? A. Increase end-of-quarter sales bonuses B. Share point-of-sales data with all members of the supply chain C. Implement single-stage control of replenishment D. Reduce lot sizes
A. Increase end-of-quarter sales bonuses
Which of the following is NOT one of the assumptions of fixed-period systems? A. Lead times are variable. B. Lead times are known. C. The only relevant costs are the ordering and holding costs. D. Items are independent of one another.
A. Lead times are variable.
Which of the following statements regarding a pull system is TRUE? A. Problems become more obvious. B. Manufacturing cycle time is increased. C. Work is pulled to the downstream stations before it is actually needed. D. Large lots are pulled from upstream stations. E. None of the above is true of a pull system.
A. Problems become more obvious.
Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. B. The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. C. The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. D. The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. E. All of the above are true.
A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.
Which of the following statements is NOT one of the differentiation strategy decisions? A. Use buffer stocks to ensure speedy supply. B. Minimize inventory to avoid product obsolescence. C. Modular design to aid product differentiation. D. Gather and communicate market research data.
A. Use buffer stocks to ensure speedy supply.
To reduce the risks from vertical integration, firms may choose to develop some form of formal collaboration known as A. a joint venture. B. vendor managed inventory. C. channel assembly. D. cross sourcing.
A. a joint venture.
A supply chain ends with A. a satisfied customer. B. manufacturers. C. distributors. D. suppliers.
A. a satisfied customer.
The purpose of safety stock is to: A. control the likelihood of a stockout due to variable demand and/or lead time. B. replace failed units with good ones. C. protect the firm from a sudden decrease in demand. D. eliminate the possibility of a stockout. E. eliminate the likelihood of a stockout due to erroneous inventory tally.
A. control the likelihood of a stockout due to variable demand and/or lead time.
The advantage of having few suppliers is to A. form a long-term relationship. B. pursue low cost. C. look for short-term attributes. D. take advantage of diseconomies of scale.
A. form a long-term relationship.
The do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the do-it-yourselfer silently handed over sample 150C-1, Musical Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware store, so the paint manufacturer had created clever workaround. The workaround was a computer-based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired shade, in this case, Musical Mist. The hardware store now needed to stock only the base paint, this machine, and a small supply of paint pigments in order to create the thousands of colors in its catalog. This scenario is a prime example of A. postponement. B. drop shipping. C. the bullwhip effect. D. vendor-managed inventory.
A. postponement.
ABC analysis is based upon the principle that: A. there are usually a few critical items, and many items that are less critical. B. as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items. C. all items in inventory must be monitored very closely. D. an item is critical if its usage is high. E. more time should be spent on class "C" items because there are many more of them.
A. there are usually a few critical items, and many items that are less critical.
A firm's probability of a stockout for a popular item is 2%. Given this information, what is its service level for this popular item? A. 98% B. 2% C. 96% D. 4%
A. 98%
What is a list of quantities of components, ingredients, and materials required to make a product? A. bill-of-material B. master production schedule C. engineering change notice D. purchase order
A. bill-of-material
A response strategy requires suppliers be selected based primarily on A. capacity, speed, and flexibility. B. being willing to share information. C. cost. D. product development skills.
A. capacity, speed, and flexibility.
A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of A. vendor-managed inventory. B. e-procurement. C. postponement. D. single stage control of replenishment.
A. vendor-managed inventory.
All EXCEPT which of the following statements about ABC analysis are true? A. In ABC analysis, inventory may be categorized by measures other than dollar volume. B. ABC analysis suggests that all items require the same high degree of control. C. ABC analysis suggests that there are the critical few and the trivial many inventory items. D. ABC analysis is an application of the Pareto principle. E. ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume.
B
Which of the following could reduce distribution risk? A. use multiple suppliers B. careful selection, monitoring and effective contracts with penalties C. cross-country diversification D. secure IT systems
B
Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A. Material requirements planning (MRP) B. Lean operations C. kanban D. Just-in-time (JIT) E. Toyota Production System (TPS)
B
Which of the following strategies is part collaboration, part purchasing from few suppliers, and part vertical integration? A. horizontal integration B. keiretsu networks C. joint ventures D. virtual companies
B
Which of these statements about the production order quantity model is FALSE? A. Because receipt is non instantaneous, some units are used immediately and not stored in inventory. B. Average inventory is more than one-half of the production order quantity. C. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is non instantaneous. D. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. E. None of the above is false.
B. Average inventory is more than one-half of the production order quantity.
Which of the following statements is TRUE? A. Predictive analytics invokes advanced optimization tools to recommend a strategy or action. B. Descriptive analytics characterizes and summaries data to facilitate understanding. C. Prescriptive analytics characterizes and summaries data to facilitate understanding. D. Descriptive analytics analyzes past data to predict the future. E. Prescriptive analytics analyzes past data to predict the future.
B. Descriptive analytics characterizes and summaries data to facilitate understanding.
If a factory wants to cut its current lot size in half, by what proportion must setup cost change? A. Cannot be determined. B. Setup cost must be cut to one fourth its current value. C. Setup cost must double from its current value. D. Setup cost must also be cut in half from its current value. E. Setup cost must quadruple from its current value.
B. Setup cost must be cut to one fourth its current value.
Low-level coding means that: A. the top level of the BOM is below level zero and that BOMs are not organized around the finished product. B. a component item is coded at the lowest level at which it appears in the BOM structure. C. the lowest-paid staff member in the production department performs the coding. D. the code being used is the code for the lowest level in the BOM structure. E. a final item has only a few levels in the BOM structure.
B. a component item is coded at the lowest level at which it appears in the BOM structure.
Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or distortion? A. secure IT systems B. alternate sourcing C. redundant databases D. training of supply chain partners on the proper interpretations and use of information
B. alternate sourcing
ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A. the number of units on hand B. annual dollar volume C. annual demand D. item quality E. unit price
B. annual dollar volume
Which of the following could reduce distribution risk? A. use multiple suppliers B. careful selection, monitoring and effective contracts with penalties C. cross-country diversification D. secure IT systems
B. careful selection, monitoring and effective contracts with penalties
Which of the following data visualization graphs shows the frequency of occurrences of a variable? A. network diagram B. histogram C. regression line D. slope graph E. line graph
B. histogram
Kanban is associated with all EXCEPT which of the following? A. small lot sizes B. increased material handling C. signals, such as cards, lights, or flags D. moving inventory only as needed E. reductions in inventory
B. increased material handling
Trucking A. does not play a role in multimodal shipping. B. is increasingly using computers to manage its operations. C. is the least used transportation mode for manufacturing goods. D. is one of the least flexible transportation modes.
B. is increasingly using computers to manage its operations.
Which of the following is characteristic of lean operations? A. no supplier partnerships B. low space requirements C. easy, mindless jobs D. inventory buffers between each workstation to minimize system downtime E. specialty workers with no cross-training
B. low space requirements
Which of the following industries has the highest supply chain cost as a percentage of sales? A. metals B. petroleum C. automobile D. restaurants
B. petroleum
Which of the following mitigation tactics could reduce economic risk? A. franchising and licensing B. purchasing contracts that address price fluctuations C. multiple transportation modes and warehouses D. subcontractors on retainer
B. purchasing contracts that address price fluctuations
What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor? A. outsourcing B. vertical integration C. horizontal integration D. virtual companies
B. vertical integration
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship? A. postponement B. advanced shipping notice C. blanket order D. drop shipping
C
Which of the following data visualization graphs illustrates relative increases or decreases of categories in time or at points of comparison? A. scatter diagram B. network diagram C. slope graph D. line graph E. bar graph
C
Which of the following statements is NOT true? A. A supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. B. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain's competitive advantage and benefits to the ultimate consumer. C. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. D. Supply chain management describes the coordination of all supply chain activities, starting with raw materials, and ending with a satisfied customer.
C. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.
Which of the following statement is NOT true? A. Probabilistic models are a real-world adjustment because demand and lead time will not always be known and constant. B. Probabilistic models relax the assumption that demand for a product is constant and certain. C. Having certain demand raises the possibility of a stockout. D. The service level is the complement of the probability of a stockout.
C. Having certain demand raises the possibility of a stockout.
Which of the following best represents the relationship between the master production schedule (MPS) and the aggregate plan? A. The MPS precedes the aggregate plan in the planning process. B. The MPS is the same as the aggregate plan. C. The MPS disaggregates the aggregate plan. D. There is no relationship between the MPS and the aggregate plan.
C. The MPS disaggregates the aggregate plan.
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A. Lean operations B. Just-in-time (JIT) C. Toyota Production System (TPS) D. kanban E. Material requirements planning (MRP)
C. Toyota Production System (TPS)
The units in inventory that have been assigned to specific future production but have not yet been used or issued from the stockroom are known as A. safety stock. B. planned order releases. C. allocated items. D. planned order receipts.
C. allocated items.
Enterprise resource planning (ERP): A. does not integrate well with functional areas other than operations. B. seldom requires software upgrade or enhancement. C. automates and integrates the majority of business processes. D. is inexpensive to implement. E. all of the above
C. automates and integrates the majority of business processes.
Which of the following business analytics tools identifies and organizes data into groups with similar attributes? A. mapping and tracking B. cohort analysis C. cluster analysis D. linear programming E. opinion mining
C. cluster analysis
Which of the following is not a goal of JIT partnerships? A. removal of in-transit inventory B. removal of in-plant inventory C. inspect all incoming shipments to ensure zero defects D. removal of unnecessary activities E. All of the above are goals of JIT partnerships.
C. inspect all incoming shipments to ensure zero defects
Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A. transportation B. overproduction C. inventory D. defective product E. queues
C. inventory
Airfreight A. represents about 10% of the tonnage shipped in the United States. B. is the oldest means of freight transportation. C. is a fast-growing mode of shipping. D. is the best way to transport natural gas.
C. is a fast-growing mode of shipping.
Speech recognition and self-driving cars are applications of A. cohort analysis. B. cluster analysis. C. machine learning. D. opinion mining. E. mapping and tracking.
C. machine learning.
Which of the following data visualization graphs represents percentages or portions of a whole? A. scatter diagram B. line graph C. pie chart D. bar graph E. slope graph
C. pie chart
Great Lakes Barge and Baggage Company makes, among other things, battery-operated bilge pumps. Which of the following activities is NOT part of JIT? They: A. produce in small lots. B. use a pull system to move inventory. C. produce in long production runs to reduce the impact of setup costs. D. continuously work on reducing setup time. E. communicate their schedules to suppliers.
C. produce in long production runs to reduce the impact of setup costs.
Which one is NOT an application of lean principle in services? A. JIT in food supply management B. improving kitchen layout at McDonald's to drive seconds out of the production process C. securing more inventory to prepare for disruption in production D. inventory sharing among members of the pharmaceutical network E. scheduling personnel availability at 15 minute increments to meet demand fluctuations
C. securing more inventory to prepare for disruption in production
Which of the following allows a segment of the master schedule to be designated as "not to be rescheduled?" A. pegging B. freeze point C. time fence D. system nervousness
C. time fence
Which of the following would NOT generally be a motive for a firm to hold inventories? A. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand B. to take advantage of quantity discounts C. to minimize holding costs D. to decouple various parts of the production process E. to hedge against inflation
C. to minimize holding costs
Prior to embarking on supply chain design, operations managers must first consider A. what kind of distribution network to have. B. how to select suppliers. C. "make-or-buy" and outsourcing decisions. D. how to manage supply chain inventory.
C. "make-or-buy" and outsourcing decisions.
Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A. Material requirements planning (MRP) B. Lean operations C. Just-in-time (JIT) D. Toyota Production System (TPS) E. kanban
C. Just-in-time (JIT)
Which of the following lot-sizing techniques results in the lowest holding costs? A. the quantity discount model B. EOQ C. lot-for-lot D. Wagner-Whitin algorithm E. POQ
C. lot-for-lot
The main trait of a single-period model is that: A. the order quantity should usually equal the expected value of demand. B. supply is limited. C. it has the largest EOQ sizes. D. inventory has limited value after a certain period of time. E. the cost of a shortage cannot be determined accurately.
D
What is a dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements? A. Economic order method (EOM) B. Periodic order planning (POP) C. Material requirements method (MRM) D. Material requirements planning (MRP)
D
What is a dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements? A. Periodic order planning (POP) B. Economic order method (EOM) C. Material requirements method (MRM) D. Material requirements planning (MRP)
D
Which of the following is generally found in most Lean environments? A. a push system for purchased parts and a pull system for manufactured parts B. a push or pull system, depending upon the rate of demand C. push systems D. pull systems E. a push system for high margin items and a pull system for low margin items
D
Which of the following statements is FALSE? A. Prescriptive analytics characterizes and summaries data to facilitate understanding. B. Descriptive analytics analyzes past data to predict the future. C. Predictive analytics invokes advanced optimization tools to recommend a strategy or action. D. All of the above. E. None of the above.
D. All of the above.
Which of the following is FALSE regarding the links between JIT and quality? A. Inventory hides bad quality; JIT immediately exposes it. B. If consistent quality exists, JIT allows firms to reduce all costs associated with inventory. C. JIT reduces the number of potential sources of error by shrinking queues and lead times. D. JIT increases the cost of obtaining good quality. E. As quality improves, fewer inventory buffers are needed; in turn, JIT performs better.
D. JIT increases the cost of obtaining good quality.
Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A. Just-in-time (JIT) B. Material requirements planning (MRP) C. Toyota Production System (TPS) D. Lean operations E. kanban
D. Lean operations
A grocery store is attempting to implement a kanban system. Which of the following would NOT be an application of kanbans? A. A line of 5 people in the Chinese department signaling the department to heat 5 orders of crab rangoon. B. An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. C. A red light on top of the cashier's lane signals that the cashier needs additional change replenished. D. The meat department stocking up on turkeys before Thanksgiving. E. All of the above are kanban applications.
D. The meat department stocking up on turkeys before Thanksgiving.
Which of the following is NOT one of the Seven Wastes? A. defective product B. motion C. transportation D. assignment E. overproduction
D. assignment
Characteristics of just-in-time partnerships do NOT include: A. removal of in-transit inventory. B. produce with zero defects. C. focus on core competencies. D. large lot sizes to save on setup costs and to gain quantity discounts. E. long-term contracts.
D. large lot sizes to save on setup costs and to gain quantity discounts.
When quantity discounts are allowed, the cost-minimizing order quantity: A. minimizes the unit purchase price. B. may be a quantity below that at which one qualifies for that price. C. is always an EOQ quantity. D. minimizes the sum of holding, ordering, and product costs. E. minimizes the sum of holding and ordering costs.
D. minimizes the sum of holding, ordering, and product costs.
A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A. component bill B. low-level bill C. phantom bill D. planning bill E. modular bill
D. planning bill
Which one of the following is a characteristic of a JIT partnership? A. active pursuit of vertical integration B. third-party logistics never used C. maximal product specifications imposed on supplier D. removal of incoming inspection E. frequent deliveries in large lot quantities
D. removal of incoming inspection
In MRP, system nervousness is caused by: A. management's attempt to evaluate alternative plans before making a decision. B. the use of phantom bills of material. C. the use of the lot-for-lot approach. D. management's attempt to continually respond to minor changes in production requirements. E. management's marking part of the master production schedule as "not to be rescheduled".
D. management's attempt to continually respond to minor changes in production requirements.
In a ________, the highest and lowest values are highlighted. A. visual inspection B. heat zone C. color map D. PivotTable E. heat map
E
Which one of the following statements is TRUE regarding JIT inventory? A. It exists just in case something goes wrong. B. It increases if setup costs decrease. C. It hides variability. D. It is minimized with large lot production. E. It is the minimum inventory necessary to keep a perfect system running.
E. It is the minimum inventory necessary to keep a perfect system running.
Which one of the following statements is TRUE about the kanban system? A. The supplier workstation signals the customer workstation as soon as a batch is completed. B. It is associated with a push system. C. The quantities in the containers are usually large to reduce setup costs. D. It is useful to smooth operations when numerous quality problems occur. E. The customer workstation signals to the supplier workstation when production is needed.f
E. The customer workstation signals to the supplier workstation when production is needed.
The fixed −period inventory system requires more safety stock than a fixed-quantity system because: A. setup costs and holding costs are large. B. this model is used for products that have large standard deviations of demand. C. replenishment is not instantaneous. D. this model is used for products that require very high service levels. E. a stockout can occur during the review period as well as during the lead time.
E. a stockout can occur during the review period as well as during the lead time.
A ________ in Excel's Conditional Formatting changes the Fill color of every cell by using a gradation of two or three different colors. ________ means more extreme. A. color map; Lighter B. heat map; Darker C. color scale; Lighter D. color map; Darker E. color scale; Darker
E. color scale; Darker
An advantage of the fixed-period inventory system is that: A. orders usually are for smaller order quantities. B. no inventory records are required. C. the average inventory level is reduced. D. safety stock will be lower than it would be under a fixed-quantity inventory system. E. there is no physical count of inventory items when an item is withdrawn.
E. there is no physical count of inventory items when an item is withdrawn.
The minimum record accuracy required for successful MRP is approximately which of the following? A. lower than 90% B. 90% C. 97% D. 95% E. 99%
E. 99%
Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage. True False
FALSE
MRP can be effective only if very accurate lot sizes are calculated in advance. True False
False
Which conditional rule should she select if she wants to make sure there are no blank entries? "Format all cells based on their values" "Format only top or bottom ranked values" "Format only unique or duplicate values" "Format only cells that contain"
"Format only cells that contain"
Which conditional rule should she select if she wants each one to be different? "Format all cells based on their values" "Format only top or bottom ranked values" "Format only unique or duplicate values" "Format only cells that contain"
"Format only unique or duplicate values"
