Operations MGMT 3

In the periodic review system, the quantity ordered is the a. Difference between the available inventory and the target inventory level b. Economic order quantity c. Safety stock d. None of the above

A. Difference between the available inventory and the target inventory level

In the aggregate, with the level strategy of aggregate planning, a. Production is level b. Inventories are level c. Sales are level d. None of the above

A. Production is level

Compared to the periodic review system, the reorder point system a. Requires less safety work b. Employs lot sizes that are more variable c. Allows for combining orders to the same supplier d. Involves a longer lead time

A. Requires less safety stock

Which of the following is NOT an example of an external factor influencing demand? a. backlogs b. consumerism c. government actions d. product life cycle

A. backlogs

Which of the following is NOT an accounting category of inventories? a. finished goods b. B items c. work in process d. raw materials

B. B items

With dependent demand inventory control, demand in a given week is a. Geared directly to the customer orders that actually arrive in that week b. Dependent on the production schedule established by operations c. Analyzed using a reorder point d. None of the above

B. Dependent on the production schedule established by operations

The economic order quantity will be greater if the a. Annual demand is reduced b. Inventory carrying charges are reduced c. Cost of ordering is reduced d. Unit cost is increased

B. Inventory carrying charges are reduced

Compared to the chase strategy, the level strategy typically involves: a. More overtime costs b. More inventory carrying charges c. Less varied sales d. More hiring and layoff costs

B. More inventory carrying charges

Which of the following would NOT be considered a motive for a firm to hold inventories? a. take advantage of economic order cycles b. minimize holding costs c. reduce stockout risks d. decouple internal operations

B. minimize holding costs

"Standardized option modules are manufactured according to forecast; a specific combination or package of modules is assembled after an order is received." describes: a. Make-to-stock b. Make-to-order c. Assemble-to-order d. Project manufacturing

C. Assemble-to-order

The reorder point is defined as a. Safety stock b. Average demand during the lead time c. Average demand during the lead time plus safety stock d. Safety stock plus the economic order quantity

C. Average demand during the lead time plus safety stock

Which of the following does NOT favor the importance of effective inventory management in manufacturing and distribution companies? a. Inventories can be a major commitment of monetary resources. b. Inventories affect virtually every aspect of daily operations. c. Inventories cannot be used as a major competitive weapon. d. Inventories are the major control problem in many companies.

C. Inventories cannot be used as a major competitive weapon.

In the chase strategy, we focus primarily on a. Changing the sales plan b. Pricing to maximize revenues c. Making planned production equal to planned sales d. Advertising to maximize revenues

C. Making planned production equal to planned sales

_____ is the MRP input detailing which end items are to be produced, when they are needed, and in what quantities. a. Gross requirements b. Inventory records c. Master production schedule d. Bill of materials

C. Master production schedule

_____ is (are) the source of product structure information in an MRP system. a. The master production schedule b. Inventory records c. The bill of materials file d. The detailed capacity plan

C. The bill of materials file

A principal objective of an economic order quantity is to reduce, on an annual basis, a. Total ordering costs b. Total inventory carrying costs c. The sum of total ordering and carrying costs d. None of the above

C. The sum of total ordering and carrying costs

In the reorder point system, stock is ordered a. To bring the available inventory up to the target inventory level b. To bring the available inventory up to the safety stock level c. When the reorder point is triggered d. To bring the available inventory up to the reorder point level

C. When the reorder point is triggered

Which of the following statements about ABC analysis is FALSE? a. In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers. b. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority if inventory savings. c. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls. d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings

D. ABC analysis is based on the presumption that all items must be tightly controlled to producce important cost savings

Which of the following is closest to the objectives of aggregate planning? a. Stable prices b. Minimizing the cost of changes in the production level c. Mininimizing the cost of carrying inventory d. Minimizing the total of the cost of changes in the production level plus the cost of carrying inventory

D. Minimizing the total of the cost of changes in the production level plus the cost of carrying inventory

Which of the following is not a component of inventory carrying costs? a. The cost of maintaining storage facilities b. Costs that are associated with obsolescence c. Costs associated with the capital that is committed to the inventory d. Ordering costs

D. Ordering costs

Which of the following is NOT an input to Materials Requirements Planning? a. Inventory records b. Bills of materials c. Master production schedule d. Planned order releases

D. Planned order releases

In the ABC approach to inventory control, we seek to a. Reduce the total inventory of high-volume A items and give them less attention b. Increase the total inventory of low-volume C items and give them more attention c. Reduce the total inventory in the A category and also in the C category d. Reduce overall inventory and the overall control effort while improving service

D. Reduce overall inventory and the overall control effort while improving service

Which of the following is not an assumption underlyinng economic order quantites a. A steady sales rate b. Each lot arrives in a single delivery c. Ordering costs are constant d. The lead time is variable

D. The lead time is variable

The reorder point method refers to: a. a method to control the quality of goods and services b. a form of plant layout c. a method to manage projects d. none of the above

D. none of the above

Which of the following would NOT ordinarily have independent demand? a. repair parts b. end items c. spare parts d. subassemblies

D. subassemblies