Mgmt422 Ch11

If the on hand inventory is 40 units, the safety stock 20 units and the target level is 120 units then an order should be placed for: A) 100 units. B) 60 units. C) 20 units. D) 40 units. E) 80 units.

80 units

Management has carefully measured the standard deviation of the demand of a product and plans to use this to calculate the level of safety stock. If they keep one Standard Deviation of safety stock then the expected service level should be approximately: 33) ______ A) 90%. B) 15%. C) 100%. D) 35%. E) 85%.

85%

Management states that they will tolerate one stockout every year for a specific item. If 10 orders are placed for the item each year, the service level desired is: A) 95%. B) 85%. C) 90%. D) 80%. E) none of the above

90%

Management is willing to tolerate one stockout every 2 years for a specific item. If 10 orders are placed for the item each year the service level desired is: A) 80%. B) 95%. C) 85%. D) 90%. E) none of the above

95%

The average demand for an item is 1000 per month. The mean absolute deviation of monthly demand is 300 units. The MAD for yearly sales will be approximately: A) 3600 units. B) 3464 units. C) 1040 units. D) 12,000 units. E) none of the above

1040 units

Given that the lead time is 1 week and the sigma is 100 units, if the lead time changes to 2 weeks then the sigma would change to about: A) 180 units. B) 200 units. C) 160 units. D) 120 units. E) 140 units.

140 units

If the standard deviation of demand is 100 units and the average demand is 1000 units, then we can be 95% confident that actual sales will be 1000 units plus or minus about: A) 100 units. B) 200 units. C) 300 units. D) 150 units. E) 400 units.

200 units

If the lead time is 1 week, the review period 1 week, the average demand 100 units per week and the safety stock is 50 units, the target level will be: A) 200 units. B) 300 units. C) 150 units. D) 250 units. E) none of the above

250 units

A product has a standard deviation of demand of 15. The safety stock for a service level of 98% would be approximately: A) 15. B) 31. C) 26. D) 14.7. E) 8.

31

Lead time for a given item is 3 weeks and sales have been recorded in 1 week intervals. If the Standard Deviation for the sales interval is 25 then the Standard Deviation for the lead time should be approximately: A) 75. B) 25. C) 8. D) 14. E) 43.

43

Among other things, the amount of safety stock carried will depend upon: A) variability of demand during the lead time. B) the frequency of reorder. C) the service level desired. D) all of the above E) A and B above

all of the above

The demand placed on a factory or a central warehouse by distribution centers is considered: A) dependent. B) uniform. C) independent. D) all of the above E) none of the above

dependent

The distribution inventory management system which forecasts when the various demands will be made by the system on central supply is called: A) pull system. B) inventory replenishment. C) distribution requirements planning. D) push system. E) order point system.

distribution requirements planning

Which of the following statements is true about safety stock? A) It depends on the required service level. B) It depends only on the amount of demand. C) It must always be carried. D) All of the above are true. E) None of the above is true.

it depends on the required service level

Demand on Central Supply tends to be: A) lower than the Distribution Centers. B) continuous. C) monotonous. D) lumpy. E) smoothed out with planned orders.

lumpy

Select the description which most closely fits the term ORDER POINT. A) the time it takes to replenish an item in inventory B) extra inventory of an item carried to protect against variations in demand during lead time C) a listing of components required to manufacture a product D) the time when an order should be placed E) none of the above

none of the above

Which of the following is true? A) The two-bin system is an example of the order point system. B) The safety stock does not depend upon the frequency of reorder. C) Order quantities are fixed in the periodic review system. D) All of the above are true. E) None of the above is true.

the two-bin system is an example of the order point system

Which of the following are basic systems for determining when to order INDEPENDENT demand items? I. Order point system II. Periodic review system III. Material Requirements Planning A) I only B) II only C) I and III only D) I and II only E) II and III only

I & II only

Which of the following systems are used to determine when the order point is reached? I. Two-bin system II. Perpetual inventory system III. Periodic inventory system IV. Safety stock system A) All are used to tell when the order point is reached. B) I and III only are used. C) II and III only are used. D) I and II only are used. E) I, II and III only are used.

I & II only are used

Which of the following are objectives of distribution inventory management? I. To provide the required level of customer service II. To minimize the costs of transportation and handling III. To always have enough of everything on hand so there are no stockouts IV. To be able to interact with the factory so as to minimize scheduling problems A) I, II, III and IV B) I, II and III C) II, III and IV D) I, II and IV E) I, III and IV

I, II, & IV

An order system in which the order quantity is allowed to vary and the order cycle is fixed is called the: A) periodic review system. B) two-bin system. C) red-tag system. D) reorder point system. E) none of the above

periodic review system

________ is an inventory record system that keeps a continuous account of transactions as they occur: A) Safety stock system B) Two-bin system C) Perpetual inventory system D) Periodic inventory system E) All of the above keep a continuous account.

perpetual inventory system

If the lead time is 1 week, the review period 4 weeks, the average demand 100 units per week and the safety stock is 50 units, the target level will be: A) 300 units. B) 250 units. C) 200 units. D) 550 units. E) 150 units.

550 units

If the sum of the absolute deviations of demand was 500 for 10 periods, MAD would be: A) 500. B) 0.02. C) 50. D) 5. E) none of the above

50

A company that keeps no safety stock can expect an average service level of: A) 50%. B) 15%. C) 85%. D) 0%. E) Safety stock does not affect the service level.

50%

For a given item controlled by a periodic review system the target level is 100 units. If there are 40 units on the shelf and the lead time is 2 weeks then the order quantity should be: A) 85 units. B) 60 units. C) 120 units. D) 140 units. E) 40 units.

60 units

For a given item the lead time is 1 week, the on hand inventory is 50 units, demand is 20 units per week, safety stock is set at 3 weeks supply and the item is ordered every 2 weeks. The order quantity should be: A) 70 units. B) 120 units. C) 40 units. D) 50 units. E) 60 units.

70 units

When using the order point system, which of the following is true? A) Order quantities are usually fixed. B) The order point depends upon the demand during the lead time plus safety stock. C) Time intervals between orders are constant. D) A and B are true. E) B and C are true.

A & B are true

Which of the following statements is true? A) Order point = DDLT + SS B) Average inventory = Q ÷ 2 + SS C) Safety stock is always needed. D) A and B are true. E) D and C are true.

A & B are true

Which of the following statements is correct? A) Safety stock depends on the variation of demand during the lead time. B) Safety stock depends on the length of the lead time. C) Safety stock depends on the service level desired. D) All of the above are correct. E) None of the above is correct.

all of the above are correct

Which of the following statements is true? A) The most common predictable pattern is called a normal distribution. B) Only A and B are true. C) Most demand patterns tend to be stable and predictable. D) All of the above are true. E) The normal curve can be described by its average (mean) and the variation of actual demand about the average.

all of the above are true

Select the description which most closely fits the term SAFETY STOCK. A) the time it takes to replenish an item in inventory B) extra inventory of an item carried to protect against variations in demand during lead time C) a listing of components required to manufacture a product D) the time when an order should be placed E) none of the above

extra inventory of an item carried to protect against variations in demand during lead time

Which of the following statements is true? I. In a pull system, central supply determines what is needed by the distribution centers. II. In a push system, all decisions are made by the distribution centers. III. An advantage of a pull system is central coordination. A) II and III only are true. B) I and II only are true. C) I and III only are true. D) All of the above are true. E) None of the above is true.

none of the above is true

A company that has regular replenishments of small value items such as a grocery store would use the ________ system. 32) ______ A) Periodic Review B) Order Point C) Push D) Kanban E) Materials Requirements Planning

periodic review

Which of the following statements is true? A) Stockouts can occur at any time in the inventory cycle. B) Stockouts do not depend on the frequency of reorder. C) Stockouts do not cost money because customers are willing to wait. D) The cost of a stockout will vary depending on the market served, the customer, and competition. E) All of the above statements are true.

the cost of a stockout will vary depending on the market served, the customer, and competition

Using the periodic review system the target level is: A) forecast demand during the review period. B) forecast demand during lead time. C) the sum of A and B. D) the sum of A and B plus the safety stock. E) none of the above

the sum of A and B plus the safety stock

The Gross Requirements on Central Supply are: A) the sum of the planned order releases from the Distribution Centers. B) the same as the Intransit Inventory. C) taken from the Distribution Centers and offset by the lead time. D) the sum of the gross requirements for the Distribution Centers. E) the sum of the gross requirements for the DC's offset by the lead time.

the sum of the planned order releases from the distribution centers

Select the description which most closely fits the term LEAD TIME. A) the time it takes to replenish an item in inventory B) extra inventory of an item carried to protect against variations in demand during lead time C) a listing of components required to manufacture a product D) the time when an order should be placed E) none of the above

the time it takes to replenish an item in inventory