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Refer to the instruction above. Use a trend projection to forecast the next week's demand. Then apply seasonal indices to determine the demand on Saturday of the fourth week. What is the demand projected to be?

141.4

Use the information in partially completed Table 16.1. What is the available-to-promise (ATP) inventory in week 1?

15 units

Use the information from Table 14.13. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and exponentially smoothed average forecast (problems # 125 and 127), giving them equal weight. What is her forecast for week #7?

38.2 pizzas

Use the information from Table 14.13. If a three-week weighted moving average were used, what would be the forecast for week 7? (The weights are 0.60, 0.30, and 0.10 with 0.60 applied to the most recent period and 0.10 applied to the oldest period.)

38.1 pizzas

Use the information in Table 14.1. If the correlation coefficient were negative, what would also be true?

An increase in fertilizer would result in a decrease in crop yield.

Which one of the following statements about inventory control systems is true?

An optional replenishment system is particularly attractive when both review and ordering costs are significant.

A bill of materials (BOM) shows all of the components of an item, the parent—component relationships, usage quantities, and lot size derived from engineering and process designs.

A buyer has more purchasing power when fewer substitutes are available.

A catalog hub is a central distribution point where buyers may purchase items directly from manufacturers before the items are shipped to retailers.

A common disruption of the external supply chain is engineering changes.

A common disruption of the supply chain resulting from internal causes is demand volume changes.

A continuous review system is sometimes called a fixed interval reorder system.

A cross-docking warehouse holds inventory from manufacturers until retailers are prepared to sell the items.

A dummy plant is useful for problems where the sum of the plant capacities equals the sum of the demands.

A fixed schedule gives each employee the next employee's schedule the following week.

A level strategy matches demand during the planning horizon by varying either the workforce level or the output rate.

A master production schedule is a schedule that specifies the timing, size, and sequence of production for aggregated product families.

A materials requirements planning (MRP) explosion occurs when the system is bombarded with too many orders to schedule at one time.

A preference matrix is a special case application of the load-distance method of comparing several potential site locations.

A rotating schedule calls for each employee to work the same days and hours each week

A services firm's sales and operations plan generates both production plan and a staffing plan.

A stock-keeping unit (SKU) is a specially designed container for holding a specific amount of an inventory item somewhere along the supply chain.

Aggregating products or services together generally decreases the forecast accuracy.

An end item in a BOM is typically both a component and a parent.

Because Geographical Information System (GIS) tools are primarily quantitative in nature, a firm's managerial criteria, such as proximity to major metropolitan areas, are not able to be included in the GIS analysis.

By their nature, firms engaged in customer services cannot do anything to manage customer demand.

Combination forecasting is a method of forecasting that selects the best from a group of forecasts generated by simple techniques.

Companies that fully customize their ERP implementation reap the greatest rewards from such systems since they can continue to use the same processes to which all employees are accustomed.

Complementary products are actions that attempt to modify demand and, consequently, resource requirements.

Concurrent engineering is the term used to describe a firm's development of a new product after it has been discovered that a competitor is engineering a similar product for launch.

EOQ should be used if you use a make-to-order strategy and the customer specifies the entire order be delivered in one shipment.

Earliest due date (EDD) is a priority-sequencing rule that states the job requiring the shortest processing time is the next job to be processed.

Early supplier involvement is a program that allows suppliers to fill orders prior to the customer placing them.

Efficient supply chains work best when contribution margins are high.

Flow time is only the time a job spends being processed, and excludes any time waiting to be processed, equipment set up time and time spent moving between operations.

Forward placement is a reduction in inventory and safety stock because of the merging of variable demands from customers.

Geographical Information System (GIS) tools are useful in solving single-facility location problems, but because of software limitations, cannot be used for determining multiple-facility locations.

If the demand for an independent demand item is continuous and uniform, so will the planned order releases of its components.

Increasing the percentage of on-time deliveries to customers actually reduces the total revenue of a firm.

Inventory turnover is obtained by dividing the average aggregate inventory value by sales per week at cost.

Judgment methods of forecasting are quantitative methods that use historical data on independent variables to predict demand.

Judgment methods of forecasting should never be used with quantitative forecasting methods

Lot-for-lot (L4L) is a rule that maintains the same order quantity each time an order is issued.

Market research is a systematic approach to determine consumer interest by gaining consensus from a group of experts while maintaining their anonymity.

More than 80 percent of all relocations are within 10 miles of the first location, so usually the existing workforce is displaced.

Once a demand forecast has been entered into a sales and operations plan, it cannot be updated since it would skew the process results.

Part commonality tends to increase inventory costs

Planned receipts are estimates of the amount of inventory available each week after gross requirements have been satisfied.

Qualitative factors are typically evaluated in terms of dollars in the preference matrix method.

Random variation is an aspect of demand that increases the accuracy of the forecast.

Regression equations with a coefficient of determination close to zero are extremely accurate because they have little forecast error.

Responsive supply chains work best when firms offer a low variety of services or products and demand predictability is high.

Salesforce estimates are extremely useful for technological forecasting.

Service location decisions are driven primarily by the operating costs at the locations under consideration.

Simulation is a procedure used to determine the "best" solution that generally uses simplified and less realistic views of a problem.

Some ways to manage demand include building anticipation inventories of goods and hiring or laying off employees.

Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, but does not include customers, such as distributors and retailers.

The Delphi method is a process of gaining consensus from a group of experts by debate and voting throughout several rounds of group discussion led by a moderator.

The EOQ is the smallest lot size that a supplier will allow a customer to order.

The SCOR model provides guidelines for how materials are to be delivered along a supply chain.

The best inventory level, when expressed as a turnover, is 52 per year.

The bullwhip effect says that in any supply chain, the ordering patterns experience increasing variance as you move closer to the end customer.

The center of gravity method considers a greater number of location factors than the break-even analysis.

The closer the value of the sample correlation coefficient is to -1.00, the worse the predictive ability of the independent variable for the dependent variable.

The competitive orientation to supplier relations is that the buyer and supplier are partners.

The larger the slope of the regression line, the more accurate the regression forecast.

The master production schedule (MPS) is the part of the material requirements planning that specifies when components must be ordered or assembled.

The operations planning and scheduling process moves from the short term scheduling level to the aggregate level.

The portion of the master production schedule farthest into the future is often frozen to reduce forecasting requirements.

The primary lever to reduce anticipation inventory is to place orders closer to the time when they must be received.

The process with the least capacity is called a capacity constrained resource if its output is less than market demand.

The projected on-hand inventory in the MPS takes into account scheduled receipts, but not planned receipts.

The ramp-up stage of the development process precedes the full launch stage.

The spreadsheet approach to sales and operations planning for a services provider includes inventory costs as one factor to be considered

The standard error of the estimate measures how closely the data on the independent variable cluster around the regression line.

The trend projection with regression model is highly adaptive.

The weeks of supply measure will improve if the weekly sales decrease.

Traffic flows are one dominant factor in locating manufacturing location.

When a firm with a network of existing facilities plans a new facility, the new facility is assumed to operate independently of the existing ones.

When comparing several sites, typically a company will pick specific available site locations, then broaden their choices to communities, and finally to alternate regions.

When looking at inventory management, the term "lot size" refers to the physical dimensions of the area where the inventory is stored.

When outbound transportation costs are a dominant factor, manufacturing facilities should be located close to suppliers and resources needed for production.

Use the information from Table 16.6. Which lot-sizing rule results in the highest projected on-hand inventory averaged over weeks 1 through week 10?

FOQ = 100

Which of the following statements about break-even analysis is incorrect?

Fixed costs vary as output changes.

Which one of the following statements is TRUE?

For projections of more stable demand patterns without trends, seasonal influences, or cyclical influences, use larger values of n in the simple moving-average approach.

Which one of the following statements on inventory placement of finished goods is best?

Forward placement might help reduce transportation cost.

Using Table 14.12, what is the MSE for months 6-10 for the exponential smoothing technique?

Greater than 599

Which one of the following statements about costs of sales and operations plans is best?

Hiring costs include the costs of advertising jobs, interviews, training programs for new employees, and initial paperwork.

Which one of the following statements about managerial inputs to production and staffing plans is best?

Human resources provide the training capacity and labor-market conditions.

Which one of the following statements regarding the economic order quantity (EOQ) is TRUE?

If an order quantity is larger than the EOQ, the annual holding cost for cycle inventory exceeds the annual ordering cost.

Which one of the following statements about lot-sizing rules is TRUE?

If the POQ rule is used, an item's lot size can vary each time an order is placed.

Use the information in Table 16.5. Which of the statements concerning item RST is TRUE? (Examine each answer independently.)

If the safety stock level were 25 units instead of 0 units, there would be a planned order release in week 2.

Use the information in Table 15.1. Which of these changes would result in the greatest improvement (in terms of total cost) for the production plan?

Increase anticipation inventory to 40 units at the start of the first month./Produce an additional 12 units using subcontracting in the second month./Produce an additional 12 units using overtime in the second and third months.

A preference matrix permits consideration of more location factors than both the transportation method and the load-distance model.

A product family is a group of customers, services, or products that have similar demand requirements and common processes, labor, and materials requirements.

A simple moving average of one period will yield identical results to a naive forecast.

A strain is placed on the supply chain during the ramp-up stage of the development process due to changing volumes, quality issues and last minute design changes.

A supply chain can be thought of as a river that flows from raw material suppliers to consumers.

ABC analysis is a process for categorizing SKUs according to dollar usage so that managers can focus on items with the highest dollar value.

Advanced planning and scheduling systems (APS) seek to optimize resources across the supply chain and align daily operations with strategic goals.

Aggregation is the act of clustering several similar products or services.

An ERP system revolves around a single comprehensive database that is made available across the entire organization.

An electronic market that brings together textbook sellers, office supply companies, apparel vendors, and students is an example of an exchange.

An exponential smoothing model with an alpha equal to 1.00 is the same as a naive forecasting model.

An intermediate item must have at least one parent and at least one component.

Anticipation inventory is used to absorb uneven rates of demand or supply.

As the annual demand increases, the EOQ also increases.

Available-to-promise (ATP) quantities are only shown in the first period (if the projected on-hand inventory is greater than zero in the first period), and subsequently in periods when the MPS quantity is greater than 0.

Available-to-promise inventory is the amount of end items that marketing can promise to customers by a certain date.

Better forecasting processes yield better forecasts.

Bias is the worst kind of forecasting error.

Break-even analysis can help a manager compare location alternatives on the basis of quantitative factors that can be expressed in terms of total cost.

Channel assembly is the process of using members of the distribution channel as if they were assembly stations in the factory.

Combination forecasting is most effective when the techniques being combined contribute different kinds of information to the forecasting process.

Concurrent engineering helps firms avoid the costly mismatch between the design of a new offering and the capability of the processes required to produce it.

Critical mass is a situation whereby several competing firms cluster near one location, and thus attract more customers than the total number who would shop at the same stores in scattered locations.

Dependent demand for an item occurs because the quantity required for it varies with the production plans of one or more parents.

Drop shipping occurs when a retailer passes customer orders directly to a wholesaler or manufacturer, which then ships the order directly to the customer with the retailer's label on it.

Efficient supply chains use low capacity cushions.

Electronic Data Interchange enables the transmission of routine, standardized business documents from computer to computer over telephone or direct leased lines.

Firms that are most likely to use backlogs tend to have a make-to-order strategy.

Focus forecasting selects the best forecast from a group of forecasts generated by individual techniques.

For items manufactured in-house, one component of the planned lead time is waiting time.

For the student advisement service at a university, business majors and education majors would constitute two different product families.

Forecast error is found by subtracting the forecast from the actual demand for a given period.

Forecasts almost always contain errors.

Green purchasing involves identifying, assessing, and managing the flow of environmental waste and finding ways to reduce it and minimize its impact on the environment.

Gross requirements are the total demand derived from all parent production plans.

If the customer must be physically present at the process, location is an important issue.

In a competitive orientation to negotiations between buyer and supplier, the buyer does not always possess the power in the relationship-the supplier sometimes holds the power and can exercise this power during negotiations with the buyer.

In presourcing, suppliers are selected early in the concept-development stage.

Jobs processed using the first-come-first-served priority rule still permits them to be expedited.

MRP II ties MRP to the company's financial system.

Many firms are concluding that large, centralized manufacturing facilities in low-cost countries with poorly trained workers are not sustainable.

Material requirements planning (MRP) is a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders.

On average, it is less expensive to relocate a service-oriented business than a manufacturing business.

Once certified, a supplier can be used by the purchasing department without the purchaser having to make background checks.

One disadvantage of centralized placement is increased shipping costs from the distribution center to the customer.

One distinction between manufacturing and services that affects sales and operations plans is that services have difficulty creating inventories in anticipation of uneven demand.

One dominant factor in locating manufacturing facilities is a favorable labor climate.

One objective of a sales and operations plan is to minimize changes in production rates.

One of the basic time series patterns is random.

One type of cost considered when preparing a sales and operations plan is inventory holding cost

Part commonality refers to the degree to which a component has more than one immediate parent.

Reducing the number of suppliers for an item carries an increased risk of interruption in supply.

Repeated onsite expansion ultimately leads to diseconomies of scale.

Responsive supply chains work best when frequent product introduction exists.

Revenue management is a way to manage demand by varying price at the right time for various customer segments to maximize revenues generated from existing supply capacity.

SKUs with higher volumes and lower weekly variability may be best served with a make- to-stock supply chain design.

SKUs with lower volumes and higher weekly variability may be best served with an assemble-to-order or make-to-order supply chain design.

Scheduling involves generating a work schedule for employees or sequences of jobs or customers at workstations.

Scheduling is the day-to-day allocation of resources to accomplish specific tasks.

Selling expenses, fixed expenses and depreciation are all considered operating expenses

Solution guidelines, or rules of thumb, that find feasible-but not necessarily the best-solutions to problems are called heuristics.

Some analysts prefer to use a holdout set as the final test of a forecasting procedure.

Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, up and down the supply chain

Technological forecasting is an application of executive opinion in light of the difficulties in keeping abreast of the latest advances in technology.

The Gantt chart can be used as a tool for sequencing work on machines and monitoring its progress.

The SCOR model focuses on the supply chain processes of planning, making, sourcing, delivering, and returning.

The best mix of full- and part-time employees is a sales and operations planning decision.

The bill of resources (BOR) is a record of parent-component relationships and all the required materials, equipment time, staff, and other resources needed, including the usage quantities.

The causal method of forecasting uses historical data on independent variables (such as promotional campaigns and economic conditions) to predict the demand of dependent variables (such as sales volume).

The cost of equipment, labor, facilities and maintenance must all be considered when a firm decides to use a contract carrier for its distribution.

The fast food restaurant had a happy hour drink special, 96 ounces of your favorite beverage for the price of only 64 ounces, from 2 pm to 4 pm. This is an example of promotional pricing used to manage demand.

The most used form of e-purchasing today is electronic data interchange.

The order-fulfillment process involves the activities to deliver a product or service to the customer.

The periodic order quantity (POQ) rule tends to keep more inventory on hand than the lot-for-lot rule, but less inventory on hand than the fixed order quantity rule.

The projected on-hand inventory in the MPS takes into account customer orders (booked) as well as the MPS quantities.

The repeated observations of demand for a product or service in their order of occurrence form a pattern known as a time series.

The sales and operations plan typically has a one-year planning horizon.

The terms "aggregate plan" and "sales and operations plan" are synonymous.

The transportation method provides optimal solutions for minimization of shipping costs in multiple facility location problems.

The trend projection with regression model can forecast demand well into the future.

Time-series analysis is a statistical approach that relies heavily on historical demand data to project the future size of demand.

Time-series forecasts require information about only the dependent variable.

Two conditions must be met by factors selected to evaluate location decisions: the factors must have a high impact on the company's ability to meet its goals and the factors themselves must be affected by the location decision.

Undertime is the situation that occurs when employees do not have enough productive work for the regular-time workday or workweek.

Using rail to move large quantities of goods is relatively cheap, but transit times are long and often variable.

Value analysis is a systematic effort to reduce the cost or improve the performance of a service or product.

Vendor-managed inventories are an example of the forward-placement tactic.

When a significant trend is present, exponential smoothing forecasts can be below or above the actual demand, and must therefore be modified.

When using Geographical Information System (GIS) tools to solve multiple-facility location problems, an analyst may also use load-distance scores and center of gravity data to arrive at trial locations.

When using the load-distance method to select a new location, the decision maker can represent the number of trips to be made, the number of customers needing a physical presence, or number of tons per week, among other measures, as loads.

Why are forecasts for product families typically more accurate than forecasts for the individual items within a product family?

A TV repair service company has a seasonal demand for its service, and there is a general shortage of skilled TV repairpersons. Which one of the following is a demand option production-planning alternative suitable for this situation?

Increase the backlog for short-term demand surges.

Which one of the following statements correctly represents a benefit of centralized buying?

Increased buying power can result in significant savings in purchasing costs.

Which one of the following statements is TRUE about a cooperative orientation in supplier relationships?

It requires few suppliers for each item or service.

Use the information in Table 16.4. Which one of the following statements about item F is BEST?

Its 100-unit scheduled receipt in week 1 could be delayed to week 2 without delaying the planned order release for product B.

Use the information in Table 16.4. Which one of the following statements on item C is TRUE?

Its projected on-hand inventory is 0 units for week 1 through week 6.

Which one of the following statements about forecasting is TRUE?

Judgment methods are particularly appropriate for situations in which historical data are lacking.

Which of the following statements about ERP systems is best?

Recent studies have shown that the most successful ERP implementations use standardized systems.

Which of the following is NOT a step in setting up a transportation tableau?

Remove the lowest and highest cost intersections from consideration.

Use the information in Table 16.4. Which one of the following statements about item C is BEST?

The 100-unit scheduled receipt of 200 units in week 1 can be delayed until week 2 without delaying item D's first planned order release.

Assume that a time-series forecast is generated for future demand and subsequently it is observed that the forecast method did not accurately predict the actual demand. Specifically, the forecast errors were found to be: Mean absolute percent error = 10% Cumulative sum of forecast errors = 0 Which one of the statements concerning this forecast is TRUE?

The forecast has no bias but has a positive standard deviation of errors.

Which of the following statements about locating facilities in the service sector is best?

The factors that apply to manufacturing firms often also apply to service facilities, but the impact of the location on sales and customer satisfaction is an important addition.

Which one of the following statements about item QRS is TRUE?

The first planned order release occurs in week 1.

A linear regression model is developed that has a slope of -2.5 and an intercept of 10. The sample coefficient of determination is 0.50. Which of the following statements is TRUE?

The sample correlation coefficient must be -0.707.

Which one of the statements concerning item LMN is TRUE?

The scheduled receipt of 80 units in week 3 should be expedited so that it is finished in week 2.

Use the information in Table 11.9. Which of these statements regarding the problem is correct?

The simplex method can be used to solve this problem.

Use the information in Table 11.10. Which of the following statements is false?

The total production from plant #3 is 450 units.

Which one of the following statements about the patterns of a demand series is FALSE?

The trend, over an extended period of time, always increases the average level of the series.

Use the information in Table 16.5. Which one of the statements concerning item RST is TRUE?

There are exactly two planned order releases needed for the first 8 weeks.

Use the information in Table 16.4. Which one of the following statements about item E is TRUE?

There are no planned order releases in weeks 1 though week 6.

Which one of the following statements about forecasting is FALSE?

Time series express the relationship between the factor to be forecast and related factors such as promotional campaigns, economic conditions, and competitor actions.

The product development team ensures compatibility of the proposed product with corporate strategy and regulatory standards in the:

analysis stage.

A financial assessment of a not-for-profit organization's near future (for one or two years ahead) is a(n):

annual plan.

Acme expected demand for rocket-powered roller skates to pick up during Roadrunner Season, so they built hundreds of extra pairs and stored them out of season. The excess production is:

anticipation inventory.

A service provider assigns a specific time for personal service to a customer with a(n):

appointment.

Which one of the following approaches for scheduling customer demand would be appropriate for a dentist?

appointments

Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a buyer can threaten to cancel future business unless the supplier adheres to the buyer's demands, this is called a ________ source of power.

coercive

A forecasting system that brings the manufacturer and its customers together to provide input for forecasting is a(n):

collaborative planning, forecasting, and replenishment system.

Andy took what he liked to call "the sheriff without a gun" approach to forecasting. Every period he tried a number of different forecasting approaches and simply averaged the predictions for all of the techniques. This overall average was the official forecast for the period. The more formal name for this technique is:

combination forecasting.

Which of these is NOT a common functionality of a GIS?

communication

Which of the following is NOT a component of the supply chain?

competitors

A new product development team that is composed of product and process engineers, marketers, quality specialists, and buyers that work together to make sure the new product can actually be built is engaging in:

concurrent engineering.

Which of the following is NOT a lever in an integrated supply chain?

elimination of product shortages and backorders

The meaning of undertime is:

employees don't have enough productive work for the number of hours that they normally work.

Which of the following changes would increase the likelihood of a supply chain experiencing the bullwhip effect?

engineering changes to the design of a product

A companywide process that cuts across traditional functional areas, business units, geographic regions, and product lines is a(n):

enterprise process.

Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a buyer has access to knowledge, information and skills desired by the supplier, this is called a(n) ________ source of power.

expert

The type of goods for which a responsive supply chain is appropriate are:

fashion goods.

An important factor for locating new manufacturing plants is:

favorable labor climate.

Most firms that choose to relocate operations have:

fewer than 10 employees.

Use the information in Table 15.6. How many days will have slack capacity?

fewer than 3

It is now near the end of May and you must prepare a forecast for June for a certain product. The forecast for May was 900 units. The actual demand for May was 1000 units. You are using the exponential smoothing method with = 0.20. The forecast for June is:

fewer than 925 units.

Use the information in Table 15.10. What is the average past due (in days) using the EDD rule?

fewer than or equal to 2 days

Use the information in Table 15.8. What is the average past due (in days) using the EDD rule?

fewer than or equal to 2 days

Which one of the following is a feature of MRP II, but not available in basic MRP systems?

financial projections

Items sold to a firm's customers are called:

finished goods

Use the information in Table 15.8. What is the average flow time (in days) using the EDD rule?

greater than 12 days but fewer than or equal to 16 days

What is the forecast for period 7 if the company uses the simple moving-average method with n = 4?

greater than 120 but fewer than or equal to 125

Using Table 14.12, what is the CFE for months 6-10 for the exponential smoothing technique?

greater than 120 but less than or equal to 123

Use the information in Table 14.10. The forecast for month 3 is:

greater than 140 but fewer than or equal to 160 units.

Use the information in Table 15.9. What is the average flow time (in weeks) using the EDD rule?

greater than 15 weeks but fewer than or equal to 20 weeks

Use the information in Table 14.10. The forecast for month 4 is:

greater than 150 but fewer than or equal to 160 units.

Use the information in Table 15.8. What is the average flow time (in days) using the FCFS rule?

greater than 16 days

Use the information in Table 15.9. What is the average flow time (in weeks) using the FCFS rule?

greater than 16 weeks but fewer than or equal to 24 weeks

Use the information in Table 14.10. The forecast for month 5 is:

greater than 160 but fewer than or equal to 170 units.

A U.S. company faced with spiraling costs in their customer care center recreated that service in Luxembourg at a fraction of the cost. This is an example of:

offshoring.

Use the information in Table 14.7. What is the forecast for July with the two-month moving-average method and June sales of 40 units?

greater than 30 but fewer than or equal to 35 units

Which of the following location factors was NOT found to dominate location decisions for new U.S. manufacturing plants?

proximity to competitors' facilities

The Delphi method of forecasting is useful when:

judgment and opinion are the only bases for making informed projections

Which of the following invalidates any analysis using the transportation method?

lack of a linear increase in shipping costs

One source of disruption caused by the external supply chain is:

late deliveries.

The lowest planning level in a sales and operations plan is:

scheduling.

With the multiplicative seasonal method of forecasting:

seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast.

Professor Willis noted that the popularity of his office hours mysteriously rose in the middle and the end of each semester, falling off to virtually no visitors throughout the rest of the year. The demand pattern at work is:

seasonal.

Refer to the instruction above. Which term most accurately describes the data points associated with Saturdays and Sundays?

seasons

One of the secondary levers for reducing pipeline inventory is to:

select more responsive suppliers.

The objective of a firm in a responsive supply chain is likely to be realized if it has a:

short lead time.

Use the information in Table 11.9. What is the cost of a plan that ships 150 units from 1 to C, 150 units from 1 to D, 250 units from 2 to A, 150 units from 2 to C, 200 units from 3 to B, and 50 units from 3 to D?

less than $15,000

Using Table 14.12, what is the mean absolute percent error for months 6-10 using the exponential smoothing forecasts?

less than 22%

Use the information in Table 11.4. If Royal Flush decides to locate a warehouse at market D, what is the total load—distance score? (Use rectilinear distance.)

less than 400

Use the information in Table 15.3. Use a level strategy with overtime and undertime. Minimize undertime by maximizing overtime during the peak period. If the firm does not pay undertime, what is the total cost of the staffing plan including the cost of regular wages, hiring, and layoffs?

less than or equal to $158,000

Use the information in Table 15.2. Suppose that overtime is allowed up to 25% of the regular-time capacity, and that overtime wages are 150% of the regular-time rate. The total cost of the level strategy with overtime and undertime, which also minimizes undertime, is:

less than or equal to $60,000.

Gantt charts can be used to:

monitor the progress of jobs and sequence work on each machine.

Use the information in Table 11.7. If the plant is located at the coordinates (5, 5), what is the total load—distance score, assuming Euclidean (straight line) distance?

more than 700 but less than or equal to 800

Use the information in Table 11.7. If the plant is located at the coordinates (5, 5), what is the total load—distance score, assuming rectilinear distance?

more than 800

Use Table 16.7 to answer this question. How many additional units of D are needed to produce 20 end items?

more than 95 but fewer than 115

Which of these is NOT identified as a component of a geographical information system?

network

Which of the following is NOT an external cause of supply chain disruptions?

new service or product introductions

The local building supply store experienced what they considered to be irregular demands for lumber after the devastating hurricane season. These unusual data points were considered:

nonbase data.

A responsive supply chain typically has:

supply chain partners that emphasize volume flexibility.

Which of the following is not a benefit of outsourcing?

technology transfer to another country or company

Which of the following is NOT used to derive an item's gross requirements?

the MPS components that are not purchased items

One of the benefits of a cooperative orientation in supplier relationships is:

the buyer sometimes suggests ways to improve the supplier's operations.

Which one of the following descriptions best defines the cycle-service level as a measure of customer service?

the desired probability of not running out of stock in any one inventory cycle.

Which of the following is NOT an advantage resulting from a firm outsourcing its customer service process?

the firm gains more control over the customer interface process.

An example of revenue management is:

two passengers, sitting side-by-side in an airplane, charged different prices depending on when they made their reservations.

Which of the following is NOT an internal cause of supply chain disruptions?

underfilled shipments

Which one of the following is NOT a method for tracking inventory and ensuring accurate records?

updating the reorder points to minimize safety stock

A systematic effort to reduce the cost or improve the performance of services or products is known as:

value analysis.

The practice whereby a manufacturer has inventories of materials on consignment from its suppliers falls under the scope of:

vendor-managed inventories.

Use the information in partially completed Table 16.3. In which week will the second planned order release occur?

week 3

Use the information in partially completed Table 16.2. In which week does the second nonzero MPS quantity occur?

week 3 or 4

If a planned receipt for an item is due in week 6 and the item's lead time is two weeks, in which week will the corresponding planned order release occur?

week 4

Use the information in partially completed Table 16.1. In which week does the second nonzero MPS quantity occur?

week 4 or 5

Refer to the instruction above. What are the total annual costs if Irmo Auto is the supplier selected?

$773,220

Refer to the instruction above. What are the total annual costs if Lexington Tire is the supplier selected?

$792,600

Use the information from Table 11.1. Calculate the total load distance for this layout.

9240

Use the information provided in Table 14.2. For every sale call made, the number of books sold increases by:

14.74 books.

Use the information in Table 11.10. The low cost solution indicates a total cost of:

$14,750.

Refer to the instruction above. What are the total annual savings if the lower cost supplier is selected?

$19,380/14900

Use the information provided in Table 14.4. What amount of Weekly Gross Revenue can be expected for a week in which no radio or newspaper advertising is purchased? (Assume all other variables are held constant.)

$20,500

Use the information in Table 15.1. If anticipation inventory is increased to 30 units at the start of the first month, what is the inventory holding cost over the entire planning period?

$215

$750,000

$25,000

Refer to the instruction above. What does the company save for the year by selecting the low-cost option at an annual requirement of 40,000 units?

$50,000

Use the information in Table 15.1. If anticipation inventory were 30 units at the start of the first month, what would the backorder cost be in the fourth month?

$540

Refer to the instruction above. What does the company save for the year by selecting this low-cost option (for annual requirements of 3,000 units)?

$3,000

Use the information in Table 14.11. What is the forecast for period 9 using a naive forecast.

$3,728

Use the information provided in Table 14.4. Adding $1,000 of Weekly Newspaper Advertising (X2) can be expected to increase Weekly Gross Revenues by what amount? (Assume all other variables are held constant.)

$3,750

Use the information in Table 14.11. Forecast the monthly sales of the machine for month 9, using the three-month moving-average method.

$3,880

Refer to the instruction above. What are the annual material costs for Acme?

$3,900,000

Use the information in Table 14.11. Use the 3-month weighted moving-average method to calculate the forecast for month 9. The weights are 0.60, 0.30, and 0.10, where 0.60 refers to the most recent demand.

$3,916

Refer to the instruction above. What are the total annual costs if Acme is the supplier selected?

$4,011,550

Refer to the instruction above. What are the total annual costs if State is the supplier selected?

$4,026,450

Use the information in Table 14.11. If the forecast for period 7 is $4,300, what is the forecast for period 9 using exponential smoothing with an alpha equal to 0.30?

$4,158

Use the information in Table 15.1. What would be the total plan cost if no more than five units each could be made each month by part-time, overtime, and subcontracted workers?

$4,775

Refer to the instruction above. What does the company save for the year by selecting this low-cost option (for annual requirements of 5,000 units)?

$5,000

Refer to the instruction above. What are the annual inventory costs if the lower inventory cost supplier is selected?

$5,220/21450

Use the information provided in Table 14.4. Adding $1,000 of Weekly Radio Advertising (X1) can be expected to increase Weekly Gross Revenues by what amount? (Assume all other variables are held constant.)

$6,500

Use the information provided in Table 14.4. What is the estimated Weekly Gross Revenue if $4,000 is spent on Radio Advertising (X1) and $7,000 is spent on Newspaper Advertising (X2)?

$72,750

Refer to the instruction above. What are the annual material costs for Lexington Tire?

$750,000

Refer to the instruction above. What are total costs to buy an annual quantity of 40,000 units?

$800,000

Use the information provided in Table 14.4. What is the estimated Weekly Gross Revenue if $7,000 is spent on Radio Advertising (X1) and $4,000 is spent on Newspaper Advertising (X2)?

$81,000

Refer to the instruction above. What are total costs to make a quantity of 40,000 units per year?

$850,000

Use the information in Table 15.1. According to the production plan, what will be the total ending inventory in the second month after the second month's demand is satisfied?

-21 units

Use Table 16.7 to answer this question. How many additional units of G are needed to produce seven end items?

Refer to the instruction above. For what range of output would you prefer to make?

0 - 30,000 units per year

Use the information in partially completed Table 16.1. What is the MPS start quantity in week 4?

0 units

Use the information in partially completed Table 16.2. What is the MPS start quantity in week 1?

0 units

Use the information in partially completed Table 16.2. What is the available-to-promise (ATP) inventory in week 1?

0 units

Refer to the instruction above. What is the average seasonal index for the Sundays in the data set?

1.54

Refer to the instruction above. What is the seasonal index for the first Saturday in the data set?

1.56

Padco averages $15 million worth of inventory in all of its worldwide locations. They operate 51 weeks a year and each week average $3 million in sales (at cost). Their inventory turnover is:

10.2 turns.

Use the information provided in Table 14.1. The value of Fertilizer required to generate 100 bushels yield must be:

10.82.

Use the information in Table 15.5. What is the minimum number of officers required if preference is given to the pair S-SU in case of a tie in the selection of off days?

Management wishes to use an FOQ lot-sizing rule for an item based on the economic order quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate?

110 units

Use the information in Table 15.1. According to the production plan, what is the unused overtime capacity in the fourth period?

Use Table 16.7 to answer this question. How many additional units of H are needed to produce seven end items?

130

What are the quantity and the week of the first planned order release?

150 units; week 2

Use the information in Table 15.1. If the firm is committed to the regular production and overtime production as shown, what level of anticipation inventory would be needed at the start of the first month to result in an ending inventory of zero after month 6?

18 units to 25 units

Use the information from Table 16.6. If a POQ lot-sizing rule is used, where P = 3, how many planned order releases are there for item XYZ? (Hint: The 80-unit scheduled receipt should remain unchanged, because it has already been released and is being worked on.)

Refer to the instruction above. What is the annual break-even quantity for choosing between making and buying in this situation?

2,000 units

What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1, 2, 3, 4, 5, and 6)?

20, 30, 0, 40, 20, 0

Use Figure 16.8 to answer this question. How many additional units of F are needed to produce twelve end items?

214

Using the three-week moving-average method, forecast sales for week 7.

Use the information provided in Table 14.3. If 10 extra miles of driving is added to the crew's daily work, how much time is added to their work schedule for that day? (Assume all other variables are held constant.)

24 minutes

Refer to the instruction above. How many shipments per year are required if Irmo Auto is the supplier selected?

Use Figure 16.8 to answer this question. How many additional units of P are needed to produce ten end items?

Use Figure 16.8 to answer this question. How many additional units of E are needed to produce ten end items?

284

The scheduled receipt of 80 units in week 3 should be expedited so that it is finished in week 2.

Use the information from Table 16.6. If an FOQ of 100 units is used, how many planned order releases are there for item XYZ? (Hint: The 80-unit scheduled receipt should remain unchanged, because it has already been released and is being worked on.)

Use the information from Table 16.6. If an L4L lot-sizing rule is used, how many planned order releases are there for item XYZ? (Hint: The 80-unit scheduled receipt should remain unchanged, because it has already been released and is being worked on.)

The planning horizon for a sales and operations plan is typically:

3 - 18 months.

Use Table 16.7 to answer this question. How many additional units of D are needed to produce seven end items?

Refer to the instruction above. For what range of output would you prefer to buy?

30,000 or more units per year

Refer to the instruction above. What is the break even quantity between buying and making?

30,000 units per year

Use the information from Table 11.1. Calculate the load distance for location Bravo.

3090

Use the information in partially completed Table 16.1. What is the projected on-hand inventory in week 6?

33 units

Use the information from Table 14.13. Using a three-week simple moving average, what is the forecast for week 7?

37.0

Use the information from Table 14.13. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and 3-week weighted moving average (problems # 125 and 126), giving them equal weight. What is her forecast for week #7?

37.55 pizzas

Use the information from Table 14.13. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week weighted moving average and exponentially smoothed average forecast (problems # 126 and 127), giving them equal weight. What is her forecast for week #7?

38.75 pizzas

Use the information from Table 14.13. What is the exponentially smoothed forecast for week #7 if α = 0.9 is used, and the forecast for week #6 was 34?

39.4 pizzas

Management wishes to use a POQ lot-sizing rule for an item that experiences an average demand of 30 units per week. If the desired average lot size is 120 units, what should P be?

4 or 5 weeks

Refer to the instruction above. How many shipments per year are required if State is the supplier selected?

Use the information in Table 16.3. What is the planned order release in week 1?

40 units

Use the information provided in Table 14.2. In order to realize the sale of 700 books, how many sales calls will the sales representative have to make?

40.4

Use Table 16.7 to answer this question. How many additional units of J are needed to produce seven end items?

Use the information provided in Table 14.3. If one delivery is added to the crew's daily work, how much time is added to their work schedule for that day? (Assume all other variables are held constant.)

48 minutes

When forecasting total demand for all their services or products, few companies err by more than:

5-8%.

Using Table 14.12, what is the tracking signal for months 6-10 using the exponential smoothing forecasts?

5.0

Use the information provided in Table 14.1. The value of Bushels when Fertilizer is 60 is:

518.

Use Figure 16.8 to answer this question. How many additional units of D are needed to produce seven end items?

Use the information from Table 14.5. Using a three-week moving average, what is the forecast for week 7?

It doesn't change the decision-they are still the high-cost supplier.

570

Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is Acme's total weighted score?

570

Use the information from Table 14.5. If a four-week weighted moving average were used, what would be the forecast for week 7? (The weights are 0.60, 0.30, 0.07, and 0.03 with 0.60 applied to the most recent period and 0.03 applied to the oldest period.)

58 pizzas

Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is State's total weighted score?

590

Use the information from Table 14.5. If a naive forecast were constructed, the forecast for week 7 would be:

60 pizzas.

Use the information in partially completed Table 16.1. What is the available-to-promise (ATP) inventory in week 7?

60 units

What are the quantities of planned order releases for item ABC for the first five weeks (weeks 1, 2, 3, 4, and 5)?

60, 0, 145, 0, 0

Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is Irmo Auto's total weighted score?

605

Refer to the instruction above. What is the average demand for the second period?

63.57

Use the information from Table 11.1. Calculate the load distance for location Alpha.

6450

Use the information in Table 15.6. What is the minimum number of tutors required if preference is given to the pair S-SU in case of a tie in the selection off days?

Use the information in Table 15.4. How much total slack will be generated from the schedule?

7 days

Refer to the instruction above. What is the break-even point in this situation?

7,500 units

Use the information provided in Table 14.2. What percent in the variation of the variable Books Sold is explained by the value of the variable Sales Calls Made?

74.8%

Use the information in partially completed Table 16.2. What is the projected on-hand inventory in week 5?

75 units

Use Figure 16.8 to answer this question. How many additional units of N are needed to produce eighteen end items?

Use the information provided in Table 14.1. What percent in the variation of the variable Bushels is explained by the value of the variable Fertilizer?

79%

Use the information in Table 15.4. What is the minimum number of workers required if preference is given to the pair S-SU in case of a tie in the selection of off days?

8 workers

Use the information provided in Table 14.3. What is the estimated work time for the crew if the schedule that day calls for 90 driving miles and 4 deliveries?

8.1 hours

Use the information provided in Table 14.1. For every unit of fertilizer applied, the crop yield increases by:

8.5 bushels.

80 units

Use the information in partially completed Table 16.2. What is the available-to-promise (ATP) inventory in week 6?

80 units

Use the information provided in Table 14.3. What is the estimated work time for the crew if the schedule that day calls for 85 driving miles and 6 deliveries?

9.5 hours

Use the information provided in Table 14.2. If a sales representative makes 55 sales calls, the number of book sales the publisher should expect is:

915.

Based on weighted scores, where should Acme locate its new facility?

Use the information in Table 15.10. Which job will be the first one completed if scheduling is done using the first-come, first-served (FCFS) rule?

Use the information in Table 15.8. Which job will be the first one completed if scheduling is done using the first-come, first-served (FCFS) rule?

Use the information in Table 15.9. Which job will be the first one completed if scheduling is done using the earliest due date (EDD) rule?

Use the information in Table 15.9. Which job will be the first one completed if scheduling is done using the first-come, first-served (FCFS) rule?

Widgets, Inc. wishes to locate two new manufacturing facilities. Based on the following subjective criteria, where should the new facilities be located? (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = 1)

A and D

Which of these is an example of complementary services?

A company that performs lawn care in the summer hangs holiday decorations in November and December.

Which of these is an example of complementary products?

A company that produces sweaters also produces swimsuits.

Use the information in Table 11.11. Which of the following statements about this scenario is incorrect?

A dummy warehouse is required to complete the analysis.

Which of the following is an example of an organization using the Geographical Information System (GIS) method for locating multiple facilities?

A hospital network that wants to locate several satellite medical facilities in outlying areas to better serve a major metropolitan area.

Which statement about forecast accuracy is TRUE?

A manager must be careful not to "overfit" past data.

Which one of the following statements regarding production and staffing plans is best?

A producer of greeting cards for all occasions can use a level strategy to good advantage because of the complementary nature of the products and the workforce to produce many varieties of cards.

Which one of the following statements about sales and operations planning is best?

A production plan generally focuses on production rates and inventory holdings, whereas a staffing plan focuses on staffing and other labor-related factors.

Which of the following statements regarding time-series methods is FALSE?

A simple moving average of three periods is identical to exponential smoothing with an alpha equal to 0.33.

Which one of the following statements concerning production and staffing plans is best?

Aggregation can be performed along three dimensions: product families, labor, and time.

Which one of the following statements about sales and operations planning is best?

All functional areas should supply inputs for developing production and staffing plans.

The Hunan Restaurant wishes to locate a new facility. Based on the following subjective criteria, where should the new facility be located? (Very good = 5, Good = 4, Fair = 3, Poor = 2, and Very poor = 1)

Sweet Candy, Inc. wishes to open two new stores. Based on the following subjective criteria, where should the new stores be located? The higher the score, the better.

B and E

Use the information in Table 15.1. Which one of these trade-offs works to your greatest advantage in terms of reducing costs over the entire planning period?

Begin with a larger anticipation inventory to avoid backorders completely.

Which one of the following actions applies to a level strategy?

Build anticipation inventory to meet the variability in demand.

Refer to the instruction above. Which alternative should be selected if annual requirements are 5,000 units?

Buy

Calculate the weighted score for each alternative. Which location would you recommend?

McKenna Restaurant wishes to open a new store. Based on the following subjective criteria, where 10 is excellent and 0 is poor, where should the new store be located?

A bias error results from unpredictable factors that cause the forecast to deviate from actual demand.

Use the information in Table 15.8. Which job will be the first one completed if scheduling is done using the earliest due date (EDD) rule?

Use the information in Case Study 16.1. Which of the following sequences is an acceptable way to process the inventory records for components A, B, C, and D?

C B D A

Which of the following statements concerning MRP is TRUE?

Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned order releases to estimate capacity requirements for critical workstations

Which one of the following statements on sales and operations planning is best?

Creative pricing is an example of a demand option sales and operations planning strategy.

Which of the following statements about cross-docking is NOT correct?

Cross-docking reduces inventory and storage space requirements, but handling costs and lead times tend to increase.

Which one of the following statements is best?

Demand options adjust demand patterns, whereas supply options change in response to changes in demand.

Use the information in Table 15.10. Which job will be the first one completed if scheduling is done using the earliest due date (EDD) rule?

Refer to the instruction above. Using the preference matrix approach for selecting suppliers, which supplier should Burdell select? total weighted score?

Irmo Auto

Refer to the instruction above. Based on your Total Cost Analysis, which supplier should be selected if the lower cost supplier is chosen?

Irmo Auto/Acme

Which statement on MRP explosion is best?

It calculates the total number of subassemblies, components, and raw materials needed for each parent item.

Which one of the following descriptions of a base-stock system is best?

It can be seen as a way to minimize cycle inventory.

Refer to the instruction above. The high-cost supplier desperately wants the Burdell Company business. They have indicated that if Burdell will select them as their supplier, they will not charge for shipping. How does this change the decision on tire suppliers?

It doesn't change the decision-they are still the high-cost supplier.

Use the information in Table 11.11. What can be said about a plan that ships 30,000 gallons from 1 to A; 6,000 gallons from 1 to C; 24,000 gallons from 2 to B; 24,000 gallons from 2 to D; and 30,000 gallons from 3 to C?

It is feasible, and the total monthly cost is less than or equal to $260,000.

What can be said about a plan that ships 40 units from 1 to C, 30 units from 2 to B, 20 units from 3 to A, and 10 units from 3 to D?

It is feasible, and the weekly shipping cost is less than $1,600.

Use the information in Table 11.9. What can be said about a plan that ships 200 units from 1 to A, 100 units from 1 to B, 100 units from 2 to B, 300 units from 2 to C, and 250 units from 3 to D?

It is not feasible in terms of satisfying warehouse demands.

Use the information in Table 11.11. What can be said about a plan that ships 18,000 gallons from 1 to C; 18,000 gallons from 1 to D; 30,000 gallons from 2 to A; 18,000 gallons from 2 to C; 24,000 gallons from 3 to B; and 30,000 from 3 to D?

It is not feasible in terms of wholesaler availabilities.

Which of the following statements about MRP II is best?

It provides more extensive information than MRP because it is tied to the company's financial system.

Which of the following statements concerning the use of the Geographical Information System (GIS) method for locating multiple facilities is TRUE?

Load-distance scores and center of gravity data can be merged with customer databases to arrive at trial locations for facilities.

Which of the following statements is best?

Location B is best over all volume levels.

Use the information in Table 11.8 to determine the best statement.

Location C is the best one if volumes are quite high.

Which one of the following statements about the relation between financial and supply-chain performance measures is TRUE?

Longer delivery times require higher levels of working capital.

Which of the following statements about MRP is TRUE?

MRP gross requirements for a component depend on the planned order releases of its immediate parents.

Refer to the instruction above. For an annual volume of 3,000 units, which supplier should be chosen?

Make

________ uses a firm's flexible processes to generate a wide variety of personalized services or products at reasonably low costs.

Mass customization.

Which of the following statements about company relocations is best?

More than 80 percent of all relocations are made within 20 miles of companies' original locations.

Which one of the following is a demand option for sales and operations planning?

Offer complementary products or services with contra cyclical demand requirements.

Which of the following statements about service resource planning is TRUE?

One resource that every service provider manages is cash.

Which one of the following statements represents an advantage of the P system over the Q system?

Orders can be more easily combined to the same supplier.

ABC analysis is closely related to:

Pareto analysis.

Which one of the following conditions can make a level strategy the most attractive

Products complementary to the existing products can be produced easily with the given facilities.

Which one of the following statements is TRUE about purchasing?

Purchasing's primary role is to satisfy the firm's long-term supply needs.

Your firm uses a continuous review system (Q system), in which the inventory position is updated after every transaction. The firm operates 52 weeks per year. One of the items has the following characteristics: Demand = 14,560 units per year Ordering cost = $40 per order Holding cost = $6 per unit per year Lead-time = 2 weeks Standard deviation in weekly demand = 100 units Cycle-service level = 80% If Q is made equal to the EOQ, what are the desired values for Q and R?

Q is between 439 and 443, and R is between 678 and 682.

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

Quantity discounts can be taken advantage of for large lot sizes.

Refer to the instruction above. Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier should Steele select?

State

Which one of the following statements concerning supply options is best?

Subcontracting can help overcome short-term capacity shortages by offloading work on other producers.

Which one of the following is TRUE for supply chain management?

Supply chain applies to both manufacturing and service organizations.

A backorder occurs when a customer order cannot be filled when it is placed, but is instead filled later.

A bill of materials is a record of all the components of an item, the parent-component relationships, and the usage quantities derived from engineering and process designs.

A common disruption of the external supply chain is product and service mix changes.

A common disruption of the supply chain resulting from internal causes is order batching.

A component is an item that may go through one or more operations to be transformed into or become part of one or more parents.

A continuous review system is sometimes called a reorder point system.

A decision maker using break-even analysis must assume that suppliers do not provide discounts for large orders.

A firm's existing, older information system is called a "legacy system."

A geographic information system contains demographic information.

A linear regression model results in the equation Y = 15 - 23X. If the coefficient of determination is a perfect 1.0, the correlation coefficient must be -1.

A manufacturing firm's sales and operations plan generates both production plan and a staffing plan.

A naive forecast is a time-series method whereby the forecast for the next period equals the demand for the current period.

A parent is any item manufactured from one or more components.

A periodic review system is a system in which an item's inventory position is reviewed periodically rather than continuously.

A planned order release indicates when an order for a specified quantity of an item should be issued.

Consider the following data concerning the performance of a forecasting method.

The CFE is less than 100, and the MAD is less than 50.

Which of the following uses of MRP in promoting a healthy environment is NOT used?

The MRP system can be used to communicate directly with the International Organization for Standardization to file ISO 9000 documentation.

Which one of the following statements represents an advantage of a Q system over the P system?

The Q system is more suited for quantity discounts and physical limitations.

Use the information in Case Study 16.1. If item C has a manufacturing lead time of two weeks, and a planned receipt of 65 units is needed in week 4, which of the following statements is TRUE?

The gross requirements for item B in week 2 is 65 units.

Refer to the instruction above. The high-cost supplier has indicated that if Steele will select them as the supplier of choice, they will not charge for shipping. How does this change the decision on bicycle frame suppliers?

The high-cost supplier is now the low-cost supplier, and becomes the frame supplier for Steele.

Refer to the instruction above. What are the annual material savings available when comparing the two suppliers?

The materials are the same cost from either supplier

Which one of the following statements about forecasting is FALSE?

The method for incorporating a trend into an exponentially smoothed forecast requires the estimation of three smoothing constants: one for the mean, one for the trend, and one for the error.

Refer to the figure above. Which is the best statement if a company simultaneously moves from point A to point B and from point D to point C?

The new supply chain efficiency curve is superior to the old one.

Which one of the following statements concerning a continuous review system is best?

Under a continuous review system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts.

Use the information in Table 14.10. The forecast for month 2 is:

Which one of the following statements concerning sales and operations planning alternatives is best?

Using overtime is an undesirable option when the overtime wage premium is high and sustained levels of top worker productivity are important.

Which one of the following statements about sales and operations planning is best?

When a firm wants to emphasize stability in its workforce, it should adopt a level production-planning strategy.

Which one of the following statements about forecasting is FALSE?

You should use the simple moving-average method to estimate the mean demand of a time series that has a pronounced trend and seasonal influences.

Which of the following is NOT a typical product family?

a group of suppliers

A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has:

a nonzero amount of bias and a nonzero amount of forecast error variability.

a staffing plan.

a production plan.

Which of these is most likely to be classified as a "load" when using the load-distance model?

a shipment

When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences:

a simple moving-average forecast with n = 20 should outperform a simple moving-average forecast with n = 3.

A sales and operations plan for a service firm is:

a staffing plan.

Use the information in Table 15.5. How much total slack is generated from the schedule?

greater than 11 days

A computer-generated memo used by inventory planners to make decisions about releasing new orders and adjusting due dates of scheduled receipts is a(n):

action notice.

It would be most appropriate to combine a judgment approach to forecasting with a quantitative approach by:

adjusting a forecast up or down to compensate for specific events not included in the quantitative technique.

A company is attempting to cope with seasonal demand patterns by managing its demand. Which one of the following will NOT help achieve this aim?

adjusting workforce levels

A financial assessment of a for-profit organization's near future (for one or two years ahead) is a(n):

business plan.

A customer is given a due date for their product order with:

backlog.

An aggressive advertising campaign was credited with K-Tel's inability to keep K-Fed's latest CD on the shelves. K-Tel continued to accept orders and promised to ship as soon as they could burn new discs. Customers weren't happy, but were willing to wait. This unfortunate situation can be described as a:

backorder.

The supply chain management department of a major manufacturer pondered a particularly weighty make or buy decision for weeks, ultimately deciding to make, rather than buy. This decision resulted in increased:

backward integration.

A quantitative method used to evaluate multiple locations based on total cost of production or service operations is called:

break-even analysis.

The load-distance model is used to minimize the total:

distance traveled.

A technique used for projecting time-phased capacity requirements for workstations is called:

capacity requirements planning.

Some discount stores are able to sell items before they have to pay their suppliers, resulting in a negative:

cash-to-cash measure.

A firm may choose to use members of the distribution channel as if they were assembly stations in the factory. Such an approach is known as:

channel assembly.

A producer of medical devices makes a single model that can be customized to talk in and display any of 47 different languages. This customization is performed in one of their five regional distribution centers as firm orders are received, providing an elegant example of:

channel assembly.

Two basic types of decision alternatives are used to arrive at acceptable production or staffing plans: supply options and demand options. If an organization that faces seasonal demand uses a supply option approach, which one of the following actions is it most likely to implement?

creating a stock of anticipation inventory

Which one of the following is most useful for measuring the bias in a forecast?

cumulative sum of forecast errors

Which of the following does not increase repeatability?

customization

Which one of the following basic patterns of demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline?

cyclical

There are historically three 32-month periods of generally rising prices in the stock market for every one 9-month period of falling prices. This observation leads you to conclude that the stock market exhibits a:

cyclical pattern.

The purpose of a rotating schedule is to:

deal with certain undesirable aspects of several individual workforce schedules.

Refer to the figure above. The movement from point A to point B indicates the:

decrease in cost.

An efficient supply chain should be preferred when:

demand is highly predictable.

The stage of new product or service development that links the creation of new services or products to the corporate strategy of the firm is called:

design.

The workforce schedule:

determines when employees work.

The stage of new service or product development at which personnel are trained and some pilot runs can be conducted to look for possible problems in production is called:

development.

Barney took what he liked to call "the shotgun approach" to forecasting. Every period he tried a number of different forecasting approaches and at the end of the period he reviewed all of the forecasts to see which was the most accurate. The winner would be used for next period's forecast (but he still made forecasts all possible ways so he could use the system again for the following period). The more formal name for this technique is:

focus forecasting.

One source of disruption caused by the internal supply chain is:

forecast error.

Using salesforce estimates for forecasting has the advantage that:

forecasts of individual sales force members can be easily combined to get regional or national sales totals.

Which location shift would qualify as forward placement?

from the manufacturer to a distribution center

Use the information in Table 15.3. The total cost of the staffing plan, including the cost of regular wages, hiring, and layoffs, using a chase strategy with hiring and layoffs but no overtime, is:

greater than $126,000.

Use the information in Table 11.12. Given the information in the optimal tableau, what is the overtime cost in dollars per unit?

greater than $14 but less than or equal to $16

Use the information in Table 11.12. Given the information in the optimal tableau, what is the inventory carrying cost, in dollars per unit per quarter?

greater than $2 but less than or equal to $3

Use the information in Table 15.2. The total cost of the staffing plan, including the cost of regular wages, hiring, and layoffs using a chase strategy with hiring and layoffs but no overtime, is:

greater than $44,000.

Use the information in Table 15.2. The total cost of the staffing plan, using a level strategy in which no overtime is allowed and the undertime paid for, is:

greater than $60,000 but less than or equal to $65,000.

Use the information in Table 15.9. What is the average past due (in weeks) using the EDD rule?

greater than 1 week but fewer than or equal to 3 weeks

Using the information in Table 15.7 and the first-come, first-served (FCFS) rule, what is the average days past due?

greater than 10 days but fewer than or equal to 14 days

What is the planned order release quantity in week 4?

greater than 100 units

Use the information in Table 15.3. Use a chase strategy with hiring and layoffs but no overtime. How many workers will be hired in month 3?

greater than 20

Use the information in Table 14.10. What is the MAD for months 2 through 5?

greater than 20 but less than or equal to 25

Use the information in Table 15.10. What is the average flow time (in days) using the EDD rule?

greater than 20 days but fewer than or equal to 30 days

Use the information in Table 15.10. What is the average flow time (in days) using the FCFS rule?

greater than 20 days but fewer than or equal to 30 days

Use the information in Table 14.7. Use the three-month moving-average method to forecast sales for June.

greater than 24 units

Use the information in Table 14.8. Using the exponential smoothing method, with alpha equal to 0.2, what is the forecasted demand for November? Use an initial value for the forecast equal to 277 units.

greater than 260 but fewer than or equal to 275 units

Use the information in Table 14.8. Using the 4-month weighted moving-average technique and the following weights, what is the forecasted demand for November?

greater than 265 but fewer than or equal to 280 units

Use the information in Table 14.8. Using the simple moving-average technique for the most recent three months, what will be the forecasted demand for November?

greater than 275, but fewer than or equal to 290 units

Use the information in Table 14.7. Suppose actual sales in June turn out to be 40 units. Use the three-month moving-average method to forecast the sales in July.

greater than 29 but fewer than or equal to 31 units

Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Detroit. Because of the specialized manufacturing process employed, considerable work-in-process and raw material inventories are created. The average inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is:

greater than 3.0.

The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.

greater than 3.75 but less than 4.00

Use the information in Table 14.7. The forecasting equation for a three-month weighted moving average is: Ft = W1Dt + W2Dt - 1 + W3Dt - 2 If the sales for June were 40 units and the weights are W1= 1/2, W2 = 1/3, and W3 = 1/6, what is the forecast for July?

greater than 30 but fewer than or equal to 33 units

Assume that management is considering locating its new plant at distribution center A. What is the load—distance score, assuming rectilinear distance?

greater than 33,000 but less than 33,500

Use the information in Table 14.6. Compute a three-week moving-average forecast for the arrival of medical clinic patients in week 5.

greater than 389 but fewer than or equal to 396

Use the information in Table 14.6. If the actual number of patients is 415 in week 5, what is the forecast for week 6, using a three-week moving-average forecast?

greater than 398 but fewer than or equal to 406

Use the information in Table 15.10. What is the average past due (in days) using the FCFS rule?

greater than 4 days

Use the information in Table 15.8. What is the average past due (in days) using the FCFS rule?

greater than 4 days

Use the information in Table 15.9. What is the average past due (in weeks) using the FCFS rule?

greater than 4 weeks

Use the information in Table 14.6. Calculate the exponential smoothing forecast for week 5 using α= 0.10 and F4 = 410.

greater than 400 but fewer than or equal to 408

The Classical Consultant Company provides forecasting research for clients such as a group of five doctors associated with a new hospital health-maintenance program. The company has been asked to forecast the number of patients requesting blood analysis per week. The past weekly average is 38 and, for the trend, is 2 per week. This week's demand was 42 blood tests. How many patients will come next week? (Suppose = 0.10 and = 0.30.)

greater than 41 but fewer than or equal to 43

Demands for a newly developed salad bar at the Great Professional restaurant for the first six months of this year are shown in the following table. What is the forecast for July if the 3-month weighted moving-average method is used? (Use weights of 0.5 for the most recent demand, 0.3, and 0.2 for the oldest demand.)

greater than 442 units but fewer than or equal to 452 units

Use the information in Table 14.9. Use the exponential smoothing method with = 0.5 and a February forecast of 500 to forecast the sales for May.

greater than 530 but fewer than or equal to 540

Use the information in Table 14.9. Use an exponential smoothing model with a smoothing parameter of 0.30 and an April forecast of 525 to determine what the forecast sales would have been for June.

greater than 545 but fewer than or equal to 555

Use the information in Table 14.10. The cumulative sum of errors (CFE) from months 2 through 5 is:

greater than 80 but fewer than or equal to 85.

Using the information in Table 15.7 and the earliest due date (EDD) rule, what is the average days past due?

greater than 9 days but fewer than or equal to 13 days

What will be the projected on-hand inventory quantity in week 7?

greater than 90 units

Using Table 14.12, what is the MAD for months 6-10 for the exponential smoothing technique?

greater than or equal to 23 but less than 25

Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on average inventories from last year's financial statement: Raw materials $2,500,000 Work-in-process $1,000,000 Finished goods $ 800,000 In addition, the cost of goods sold last year (50 weeks) was $15 million. What was the inventory turnover?

greater than three but less than four

Which of the following is NOT an advantage the Internet provides for a firm's order placement process?

greater variety and better quality of products available

A favorable labor climate might include all of the following EXCEPT:

high average wages.

An efficient supply chain typically has:

high inventory turns.

Which one of the following conditions favors a level strategy for manufacturing firms?

highly automated equipment and a make-to-stock strategy

Which of the these sales and operations planning levers is associated with interviews, training, and severance pay?

hiring and layoffs

The electricity bill at Padco was driven solely by the lights throughout the office; everything else was driven by alternative energy sources. The office was open roughly 8 hours a day, five days a week and the cleaning crew spent about the same amount of time in the offices each week night. The kilowatt hour usage for the office was best described as a:

horizontal demand pattern.

Which of the following is a back-office module in a typical ERP system?

human resources

Which of the following is NOT an example of dependent demand items?

ice skates, roller skates

Which of the following is NOT identified in the text as a competitive advantage of a mass customization strategy?

improvement of the quality of parts produced

Which of the following changes would decrease the likelihood of the bullwhip effect?

instituting a policy of no discounts or promotions

It is desirable for a firm in a responsive supply chain to have:

inventory investments as needed to enable fast delivery times.

Which of the following is the best example of a physical constraint on the sales and operations plan?

inventory storage space

Management is considering locating a new plant at the site of one of the four distribution centers. What is the load—distance score if the plant is located at distribution center A? (Use rectilinear distance.)

less than or equal to 4500

The transportation method of production planning is a special case of:

linear programming.

Which one of the following is an example of causal forecasting technique?

linear regression

The center of gravity technique does not take into consideration the:

location of any given site.

Backorders and stockouts are most likely to cause expenses for:

lost sales.

Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of average inventory?

lot for lot (L4L)

The sales and operations planning strategy to be used should be consistent with the business environment. Which one of the following pairs of business environment and strategy is consistent?

low inventory holding cost; build anticipation inventory

Possible causes of disruption due to internal supply chain problems are:

machine breakdowns or inexperienced workers.

Which of the following is NOT a stage in the New Service / Product Development Process?

maintenance

The judgment methods of forecasting are to be used for purposes of:

making adjustments to quantitative forecasts due to unusual circumstances

The manufacturer developed and tested a questionnaire, designed to assist them in gauging the level of acceptance for their new product, and identified a representative sample as part of their:

market research.

Which one of the following is an input to the MRP system?

master production schedule

The timing and size of production quantities for each product in the product family is specified by the:

master production schedule.

The plans for the components, purchased materials, and workstations are developed in the:

material requirements planning process.

If the plant is located at A, what is the total load—distance score, assuming Euclidean (straight line) distance?

more than 140 but less than or equal to 180

Use the information in Table 11.3. If the plant is located at the center of gravity, what is the load—distance score, assuming rectilinear distance?

more than 1600 but less than or equal to 1700

Use Table 16.7 to answer this question. How many additional units of J are needed to produce 20 end items?

more than 175 but fewer than 205

Use the information in Table 11.6. What is the total load—distance score for the two plants if Plant 1 is located at the center of gravity serving A, B, and C, and Plant 2 is at the center of gravity serving D and E? (Assume Euclidean, or straight line, distance.)

more than 260 but less than or equal to 280

Use the information in Table 11.6. What is the total load—distance score for the two plants if Plant 1 is located at the center of gravity serving distribution centers A, B, and C, and Plant 2 is located at the center of gravity serving D and E? (Assume rectilinear distance.)

more than 300 but less than or equal to 350

Use Table 16.7 to answer this question. How many additional units of H are needed to produce 20 end items?

more than 450

Use Table 16.7 to answer this question. How many additional units of G are needed to produce 20 end items?

more than 50 but fewer than 60

Use the information in Table 11.5. If a facility were to be located at (15,15), what would be the load—distance score? (Assume rectilinear distance.)

more than 5400

The new supply chain efficiency curve is superior to the old one.

more than 60% of its total income from sales on purchased services and materials.

Use the information in Table 11.6. If a plant is located at a center of gravity, what is the load—distance score, assuming rectilinear distance?

more than 600

An example of a dependent demand item for services is a(n):

operating suite at a hospital.

Shipments of Product Q from a plant to a wholesaler are made in lots of 400. The wholesaler's average demand for Q is 150 units per week. Lead time from plant to wholesaler is 5 weeks. The wholesaler pays for the shipments when they leave the plant. The plant has proposed several new lead time and lot size options to the wholesaler (see table below). If the wholesaler's goal is to minimize total cycle plus pipeline inventories, which option should the wholesaler select?

option #3

Which of the following DOES NOT generate pressure to decrease inventories?

ordering costs

The bullwhip effect is characterized by:

ordering patterns that experience increasing variance as you proceed upstream in the chain.

The time that employees work that is longer than the regular workday or workweek for which they receive additional pay is:

overtime.

Any item manufactured from one or more components is a(n):

parent.

The SCOR model focuses on the basic supply chain processes of:

plan source, make deliver, return.

The SCOR model requires a(n):

point of reference.

A somewhat successful computer manufacturer makes a generic computer in five exciting colors. Once orders are received, the computer guts are encased in the customer's choice of colored case at the factory. This approach to production is known as:

postponement.

The practice of selecting suppliers and giving them significant responsibility for the design of certain components or systems of the product is called:

presourcing.

Which word best describes forecasting?

process

Responsive supply chains should be preferred when:

product variety is high.

The intermediate link between the business plan and the MPS is the:

production plan.

Companies perform aggregation along the three dimensions of:

products / services, labor, time.

Approaches to e-purchasing include all of the following EXCEPT:

radio frequency identification (RFID).

Polly Prognosticator was the greatest quantitative forecaster in recorded history. A skillful user of all techniques in your chapter on forecasting, she knew better than to try and develop a forecast for data that exhibited a:

random pattern.

One aspect of demand that makes every forecast inaccurate is:

random variation.

Inventories needed for the production of services and goods (inputs to a firm's transformation processes) are called:

raw materials

Quality of life issues include:

recreational facilities.

Which of these distance calculation methods provides the most accurate input to a load-distance calculation?

rectilinear distance

Which of the following usually is an advantage of on-site expansion, compared to building a new facility?

reduced construction time and costs

Which one of the following is usually an advantage of building a new facility, compared to on-site expansion?

reducing transportation costs

Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a supplier values identification with a buyer, this is called a(n) ________ source of power.

referent

A specific time and a hotel room are assigned to a customer by a service provider using a(n):

reservation.

Which one of the following approaches for scheduling customer demand would be appropriate for a fancy hotel?

reservations

Based on the sales and operations plan for a service provider, the next planning level is:

resource planning.

The service analogy to the bill of materials in a manufacturing company is the bill of:

resources.

The process of varying pricing at the right time for different customer segments to maximize revenue generated from existing supply capacity is called:

revenue management.

A front-office module for an ERP system includes:

sales and marketing.

The number of #2 pencils the bookstore sells appears to be highly correlated with the number of student credit hours each semester. The bookstore manager wants to create a linear regression model to assist her in placing an appropriate order. In this scenario:

the independent variable is student credit hours

A quantitative method used to evaluate single locations based primarily on proximity is:

the load-distance method.

A forecaster that uses a holdout set approach as a final test for forecast accuracy typically uses:

the older observations in the data set to develop the forecast and more recent to check accuracy.

Which best defines the gross requirements for a component item?

the total demand for the component derived from all immediate parents

What is the meaning of the acronym 3PL?

third party logistics provider

Job flow time is defined as the:

time of completion of a job plus the time it was available in a work station.

Facilitating goods in a hotel's bill of resources would include a:

towel.

Examples of radio frequency identification (RFID) could include all of the following EXCEPT:

tracking the status of engineering changes during development of a new product line.

Entering new information in the database of an ERP system is a(n):

transaction.

What services are typically offered by a 3PL?

transportation

A regression equation with a coefficient of determination near one would be most likely to occur when the data demonstrated a:

trend demand pattern.

Use the information from Table 14.13. The pizza shop manager is looking for a forecasting approach that will forecast her demand within 0.5 pizzas. If the actual demand for week #7 was 39 pizzas, which of the combination forecasts came closest to predicting this demand?

weighted moving average and exponentially smoothed forecast pizzas

Using Table 14.12, what is the order of the forecasting techniques from most accurate to least accurate based on their errors for months 6-10?

weighted moving average, moving average, exponential smoothing

MRP can be used to best advantage under which one of the following circumstances?

when the item's demand depends on the production plans of its parent(s).

Weeks of inventory and inventory turns are reflected in:

working capital.

Which would be the best location using the center of gravity method?

x < 10, y > 5

Use the information in Table 11.5. If Paul desires to locate a manufacturing facility at the center of gravity, what would be the x and y coordinates of the facility?

x < 15, y < 14

Use the information from Table 11.2. What are the x and y coordinates for the center of gravity?

x < 6, y > 7

Use the information in Table 11.4. What is the center of gravity?

x < 7, y > 8

Use the information in Table 11.3. What are the x and y coordinates for the center of gravity?

x > 14, y > 15

Use the information in Table 11.6. Assume that two plants, rather than one, are to be locate. Plant 1 serves distribution centers A, B, and C. Plant 2 serves distribution centers D and E. What is the center of gravity for plant 1?

x > 4, y < 7

Use the information in Table 11.7. What are the x and y coordinates for the center of gravity?

x > 4.5, y < 2

A grower and shipper of fresh gourmet herbs has determined the following demand forecast for the five metropolitan markets that the firm serves. Based on your calculations of the center of gravity, where should the new herb farm be located?

x > 6, y > 8

Use the information in Table 11.6. What are the x and y coordinates for the center of gravity?

x > 7.5, y < 6

Management wants to build a new plant that would be located at the center of gravity of the four distribution centers. Which of the following options best represents the coordinates of the new plant location?

x coordinate is greater than 170 but less than 190; y coordinate is greater than 230 but less than 250.

Kiddie Clothes wishes to locate its warehouse so that it would serve its four different stores, described as follows. Based on the center of gravity, what are the x and y coordinates of the proposed warehouse location?

x is less than or equal to 2.5; y is greater than or equal to 2.9.

Bill Burns, district manager of the Pizza Palace, wishes to locate a new store in the metropolitan areas. Using the following information, what are the x and y coordinates for the center of gravity? Don't round your answer up or down before making your choice.

x is less than or equal to 4; y is greater than or equal to 4.5.

Which of the following generates pressure to increase inventories?

ordering costs

160 units

What is generally true about the class A SKUs in ABC analysis? They represent about:

20 percent of all SKUs. 80 percent of the dollar usage.

What is generally true about the class B SKUs in ABC analysis? They represent about:

30 percent of all SKUs and about 15 percent of the dollar usage.

What is generally true about the class C SKUs in ABC analysis? They represent about:

50 percent of all SKUs. 5 percent of the dollar usage.

Shipments of Product X from a plant to a wholesaler are made in lots of 600. The wholesaler's average demand for X is 100 units per week. Lead time from plant to wholesaler is 4 weeks. The wholesaler pays for the shipments when they leave the plant. What is the total of the wholesaler's current cycle plus pipeline inventories?

700 units If the plant reduces its lead time from 4 to 2 weeks and keeps its 600 unit lot size, what is the wholesaler's new total cycle plus pipeline inventories?500 units If the plant reduces its shipment lot size from 600 to 400 units and keeps its 4 week lead time, what is the wholesaler's new total cycle plus pipeline inventories?600 units Which of the following situations results in the wholesaler's total cycle plus pipeline inventories amounting to 550 units?plant shipment lot size of 500 and plant-to-wholesaler lead time of 3 weeks Which of the following situations results in the wholesaler's total cycle plus pipeline inventories amounting to 400 units?plant shipment lot size of 400 and plant-to-wholesaler lead time of 2 weeks

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

A decrease in holding cost will increase the EOQ.

Which one of the following statements about inventory control systems is best?

A single-bin system is essentially a P system, with the target inventory and current inventory position established visually.

Which one of the following statements concerning the economic order quantity (EOQ) is TRUE?

An increase in demand will increase the EOQ.

The scheduled receipts are orders that have been placed but not yet received.

Considering the EOQ model, smaller lots are justified when holding costs are decreased.

Dependent demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other item held in stock.

If on-hand inventory = 100 units, scheduled receipts = 100 units and backorders = 100 units, the Inventory Position (IP) is the sum of the three, or 300 units.

One component of the ordering cost of inventory is shrinkage.

Reducing setup costs will increase the pressure to keep larger inventories.

Repeatability is an undesirable feature of some orders because they must be repeated until the order is filled correctly.

Supply chain design for a service provider is driven primarily by the need to control the materials it consumes as it delivers its various services.

When using ABC analysis, class C SKUs should be reviewed frequently.

While it is important to manufacturing firms, little can be done to improve supply chain strategy in most service organizations.

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 40 units Open orders (scheduled receipts): 100 units Backorders: 60 units Reorder point: 100 units Quantity per order: 50 units Which of the following statements best describes Hess's situation regarding inventory replenishment?

Hess should place an order for 50 units, since the inventory position is less than the reorder point.

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 80 units Open orders (scheduled receipts): 100 units Backorders: 20 units Reorder point: 150 units Quantity per order: 50 units Which of the following statements best describes Hess's situation regarding inventory replenishment?

No action is required, since Hess's inventory position is greater than the reorder point.

The two-bin inventory system is a type of visual system.

When looking at inventory management, the term "lot size" refers to the quantity of an inventory item management either buys from a supplier or manufactures using internal processes.

A quantity discount is attractive because there is a drop in the price per unit when the order is sufficiently large.

A stock-keeping unit (SKU) is an individual item or product that has an identifying code and is held in inventory somewhere along the supply chain.

A stockout occurs when an item that is typically stocked is not available to satisfy a demand the moment it occurs.

As the service level increases, the probability of not running out of stock during a cycle decreases.

Considering the EOQ model, a reduction in ordering costs justifies reducing the lot sizes ordered.

Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day.

EOQ should be used if you follow a make-to-stock strategy and the item has relatively stable demand.

If on-hand inventory = 100 units, scheduled receipts = 100 units and backorders = 100 units, the Inventory Position (IP) is 100 units.

Increasing inventory levels can sometimes help a firm reduce both its inbound and outbound transportation costs.

Independent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decisions for any other items held in stock.

Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.

One component of the holding cost of inventory is interest.

Setup cost is independent of order size.

Supply chain management tries to match the flow of materials, services and information with demand.

The finished goods of one firm may actually be the raw materials for another firm.

The fundamental purpose of supply chain design for a manufacturer is to control inventories by managing the flow of materials.

The primary reason for keeping inventories low is that inventory represents a temporary monetary investment in goods on which a firm must pay interest.

The purpose of supply chain design is to shape a firm's supply chain to meet the competitive priorities of its operations strategies.

The purpose of supply chain management is to synchronize a firm's processes with those of its suppliers and customers.

A company operating under an EOQ policy enjoys rising annual demand for their products for three consecutive years. During this time their holding cost and ordering cost remain constant. Which statement is best?

Their order quantity will rise but the time between orders will fall

The Lemma Company manufactures and sells 10 products. Ways have been found to cut both the setup and inventory holding costs in half. What effect will this have on the economic order quantities of the 10 products?

They will not change.

An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system) or a P system (periodic review system) answers these questions?

Under a P system, an order is placed to replenish the inventory position up to the target level T every P time periods.

Sensitivity analysis on the economic order quantity (EOQ) formula can help the operations manager answer several questions on how to manage inventories. Which one of the following questions is NOT answered by EOQ sensitivity analysis?

What should happen to lot sizes if supply and lead-time uncertainty increase?

Which one of the following statements is best?

When no safety stock is maintained, stockouts will occur during approximately 50% of the cycles. OR A P system requires more safety stock than a Q system.

Consider the following data for an independent-demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop: Weekly demand = 50 units Ordering cost = $8/order Holding cost = $4/unit/year Weeks in a year = 50 If Crittenden uses the EOQ model, how frequently must she place orders for this item?

every 2 weeks. Due to new ordering procedures initiated by Crittenden, the ordering cost is dropping to $4 per order. At the same time, the weekly demand increases to 64 units per week due to an increase in business. What effect do these changes have on the EOQ quantity for this item?The EOQ quantity decreases by 20%.

Tom Bergman, owner and operator of the Earplug Superstore, is reviewing the costs associated with the store's best-selling hearing aid, the BZ15. The data available to Mr. Bergman concerning this device follow. Demand = 25 units/week Order cost = $3/order Holding cos = $1.50/unit/year The Earplug Superstore operates 52 weeks a year. If Tom decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost?

greater than $100 but less than or equal to $115. Tom cuts the ordering cost in half by implementing a streamlined processing system. How many fewer units should he now order each time he places an order?greater than 20 units. If Tom orders a one-year supply at a time, how much higher are his total (ordering and holding) costs compared to total costs incurred if he ordered at his EOQ?greater than $800. If Tom orders at the economic order quantity, how many units does he order at a time?less than or equal to 75 units. If Tom orders such that his annual holding cost is twice what his annual ordering cost is, how many units at a time is he ordering?greater than 100 but less than or equal to 105 units.

An item experiences an annual demand of 7,200 units. It costs $8 to hold an item in inventory for one year and $16 to place an order. If the EOQ model is used, what is the time between orders? Assume that there are 52 business weeks in a year.

greater than 1 week but less than or equal to 2 weeks

The Hastings Company is a nation-wide wholesaler for small electronic devices. One of its most popular items is a calculator, the "Whizz-Bang 1100". Hastings's demand, lead time and cycle service requirements for the W-B 1100 are as follows: Demand = 25,000 units/year Number of weeks per year = 50 weeks Standard deviation of weekly demand = 100 units Average lead time = 6 weeks Standard deviation of lead time: 2 weeks Cycle-service level = 85% Hastings uses a continuous review system to control inventory. A normal distribution table is appended to this exam. What is the standard deviation of demand during lead time?

greater than 1,000 but less than or equal to 1,500 units. What safety stock should Hastings use for the Whizz-Bang 1100?greater than 500 units but less than or equal to 1,500 units. What reorder point should Hastings use for the Whizz-Bang 1100?greater than 3,600 units but less than or equal to 4,800 units. If Hastings decides to increase its cycle-service level to 90%, what is the new reorder point if all other parameters remain the same for the Whizz-Bang 1100?greater than 3,000 units but less than or equal to 4,500 units.

Cynthia Korinsky, manager of a large medical supply house that operates 50 weeks per year and five days per week, has decided to implement a periodic review system for all class A SKUs. One such SKU has the following characteristics: Demand = 10,000 units per year (or 40 units per workday) Order cost = $50 per order Holding cost = $5 per unit per year If Korinsky wishes to minimize total cost (thereby approximating the EOQ), the number of workdays between orders (or P), should be:

greater than 10 days but less than or equal to 12 days.

Demand = 50,000 units/week Standard deviation of weekly demand = 15,000 units Average lead time = 8 weeks Standard deviation of lead time: 3 weeks Cycle-service level = 80% A continuous review system is used to control inventory. A normal distribution table is appended to this exam. What is the standard deviation of demand during lead time?

greater than 100,000 units but less than or equal to 200,000 units. What safety stock should the firm use for this product?greater than 100,000 units but less than or equal to 150,000 units. What reorder point should the firm use for this product?greater than 500,000 units. If the firm decides to increase its cycle-service level to 90%, what is the new reorder point if all other parameters remain the same for this product?greater than 550,000 units.

The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has an estimated annual demand of 8,000 units. Talbot estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year. What is the economic order quantity for the XO-01?

greater than 180 units but less than or equal to 250 units. What are the annual inventory holding costs if Talbot orders using the EOQ quantity?greater than $1,500 but less than or equal to $4,000. What are the annual ordering costs if Talbot orders using the EOQ quantity?greater than $1,000 but less than or equal to $2,500 What are the total annual holding and ordering costs if Talbot orders using the EOQ quantity?greater than $2,500 but less than or equal to $5,000 What is the cycle length (time between orders) when orders are placed using the EOQ quantity?greater than 5 days but less than or equal to 10 days. How many times per year must Talbot order the XO-01 when orders are placed using the EOQ quantity? greater than 30 times per year. The purchasing manager decides that, in order to save purchasing time, orders for the XO-01 will be placed every three months, or four times per year. How much does this approach cost Talbot in total annual holding and ordering costs (instead of Talbot ordering using the EOQ quantity)? greater than $14,000 but less than or equal to $18,000

You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item: Demand = 25,000 units/year Ordering cost = $30/order Holding cost = $8/unit/year Lead time = 2 weeks Standard deviation in weekly demand = 100 units A normal distribution table is appended to this exam. What safety stock level provides a 95% cycle-service level?

greater than 200 but less than or equal to 250 units. What is the economic order quantity for this item?greater than 400 but less than or equal to 450 units. How many orders per year does the company place if they order the economic order quantity each time?less than or equal to 70 units. What is the length of their order cycle if they order the economic order quantity each time?greater than 6 days If the company desires a 95% service level, how many times per year will they stock out if they order the economic order quantity each time?less than or equal to 3 times. What is the reorder point for this item if they use a 95% service level?1,194 units. What is the annual cost of holding safety stock for this item if they use a 90% service level?less than or equal to $1,500. If this firm uses an EOQ model for purchase decisions, which change would result in the biggest increase in order quantity over the order quantity determined with the original data?The cost of ordering rises to $50 per order. What is the total cost (ordering and carrying) if the company orders the economic order quantity for this item?greater than $3,400.

Demand = 52,000 units/year Standard deviation of weekly demand = 110 units Ordering costs = $45/order Holding costs = $0.50/unit/year Cycle-service level = 90% Lead time = 2 weeks Number of weeks per year = 52 weeks A normal distribution table is appended to this exam. A firm uses the periodic review system to control the item depicted above. It reviews the item's status every three weeks (P = 3). At the most recent inventory review, an inventory clerk found 1,500 units. There were no scheduled receipts and no backorders. How many units should be ordered? (Hint: You must calculate T before answering this question.)

greater than 3,750 but less than or equal to 4,000 units. If the firm changed to a continuous review system, what would be the reorder point?greater than 2,000 units. What is the EOQ for this item?greater than 3,000 but less than or equal to 4,500 units.

Demand = 5,200 units/year Standard deviation of weekly demand = 11 units Ordering costs = $45/order Holding costs = $2/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 3 weeks Number of weeks per year = 52 weeks If a firm uses the continuous review system to control the inventory, what would be the reorder point?

greater than 300 but less than or equal to 600 units. The firm decided to change to the periodic review system to control the item's inventory. For the most recent review, an inventory clerk checked the inventory of this item and found 500 units. There were no scheduled receipts at the time. How many units should be ordered? (HINT: Use the EOQ model to derive P, the time between reviews.)greater than 300 but less than or equal to 600 units

Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year. A normal distribution table is appended to this exam.What is the EOQ for these papers?

greater than 5,000 units. What is the reorder point R to satisfy a 98% cycle-service level?greater than 1,600 units but less than or equal to 1,700 units. What service level does a reorder point of 1,524 imply?greater than 60%. If lead-time increases by three days, what is the reorder point needed to maintain a 98% service level?greater than 2,500 units but less than 2,600 units. What is the cost of holding the safety stock necessary to maintain the 98% service level?greater than $30 but less than $40. What is the standard deviation of demand throughout the five-day lead-time period?about 67 units. What combination of changes in lead-time and service level would result in exactly the same level of safety stock as indicated in the table?) Lead-time increases to 20.54 days and service level drops to 90%.

Demand = 100,000 units/year Number of days per year = 250 weeks Standard deviation of weekly demand = 50 units Average lead time = 5 days Standard deviation of lead time: 2 days Cycle-service level = 99% A continuous review system is used to control inventory. A normal distribution table is appended to this exam. What is the standard deviation of demand during lead time?

greater than 500 units but less than or equal to 1,500 units. What safety stock should the firm use for this product?greater than 1,500 units but less than or equal to 2,500 units. What reorder point should the firm use for this product?greater than 4,500 units. If the firm decides to reduce its cycle-service level to 95%, what is the new reorder point if all other parameters remain the same for this product?greater than 3,500 units but less than or equal to 4,500 units.

Jan Tuttle is the inventory manager of an art supply store. She uses a periodic review system for all oil paints. The number of periods between orders (P) for red #68 is 15 workdays. (The store operates 50 weeks per year, five workdays per week.) Additional information concerning red #68 follows. Demand = 30 units/workday Standard deviation of daily demand = 4 units/workday Lead-time = 7 workdays Desired cycle-service level = 85% A normal distribution table is appended to this exam. What is the target inventory level T for red #68?

greater than 650 units.

Shipments of Product A from a distribution center to a retailer are made in lots of 350. The retailer's average demand for A is 75 units per week. Lead time from distributor to retailer is 3 weeks. The retailer pays for the shipments when they leave the distributor. The distributor has agreed to reduce the lead time to 2 weeks if the retailer will purchase quantities of 400 per shipment instead of 350. With the change in purchased quantities, the average cycle inventory will:

increase by 25 units. With the change in lead times, the pipeline inventory will: decrease by 75 units. The net impact on the retailer will be: a net average decrease in cycle and pipeline inventories of 50 units.

The Lemming Company implements an aggressive marketing campaign and effectively doubles the annual demand for Model 13s. Their total annual holding cost should:

increase by 40%.

Which of the following generates pressure to decrease inventories?

inventory shrinkage costs

A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead-time for the item is six weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. A normal distribution table is appended to this exam.What is the economic order quantity (EOQ) for this item?

less than or equal to 175 units. What is the desired safety stock level if the company has a policy of maintaining a 90% cycle-service level?greater than 50 but less than or equal to 100 units. What is the reorder point if the company finally decides to implement a 95 percent cycle-service level?greater than 350 units

The Burdell Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the "Smooth Shifter", is used for the two most expensive of Burdell's four models, and has an estimated annual demand of 300 units. Burdell estimates the cost to place an order is $40, and the holding cost for each assembly is $60 per year. The company operates 250 days per year. What is the economic order quantity for the Smooth Shifter?

less than or equal to 40 units. What are the annual inventory holding costs if Burdell orders using the EOQ quantity?greater than $500 but less than or equal to $700. What are the annual ordering costs if Burdell orders using the EOQ quantity?greater than $500. What are the total annual holding and ordering costs if Burdell orders using the EOQ quantity?greater than $1,000 but less than or equal to $1,500. What is the cycle length (time between orders) when orders are placed using the EOQ quantity?greater than 15 days. How many times per year must Burdell order the Smooth Shifter when orders are placed using the EOQ quantity?more than 10 times but fewer than or equal to 20 times per year. The purchasing manager decides that, in order to save purchasing time, orders for the Smooth Shifter will be placed once a month, or twelve times per year. How much does this approach cost Burdell in additional annual holding and ordering costs (instead of Burdell ordering using the EOQ quantity)?less than or equal to $50

Vilas County Hospital consumed 400 boxes of bandages per week last year. The price of bandages was $80 per box, and the hospital operates 52 weeks per year. The cost of processing an order was $64, and the cost of holding one box throughout a full year was 20% of the value of the material. Last year the hospital ordered bandages, on average, once every two weeks, each time ordering 800 boxes. What extra cost did the hospital incur that could have been avoided if the EOQ concept had been applied?

more than $1,450

Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item: Demand = 50,000 units/year Ordering cost = $35/order Holding cost = $2/unit/year Lead-time = 3 weeks Standard deviation in weekly demand = 125 units A normal distribution table is appended to this exam. What is the EOQ for this item?

more than 1,300 units. If Peterson wishes to provide a 90% cycle-service level, what is the reorder point?greater than 3,100 but fewer than or equal to 3,500 units.

Which of the following is NOT a lever for reducing cycle inventories?

place purchased item orders at fixed intervals

You have taken a job in industry and are facing your first ordering decision. As you prepare to place the order, you remember your instructor teaching you that you wouldn't use the EOQ formula if:

the order size is constrained by capacity limitations such as the number or size of the delivery trucks.

A neighborhood sportswear store sells a pair of Victoria sneakers for $40. Due to the recent fitness craze, these shoes are in high demand: 50 pairs of shoes are sold per week. The ordering cost is $20 per order, and the annual holding cost is 20% of selling price. If the store operates 52 weeks a year, what can you say about the current lot size of 235?

too large

Which of the following DOES NOT generate pressure to increase inventories?

transportation costs

Items, such as components or assemblies, needed to manufacture a final product are called:

work-in-process

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