Quiz Questions 7

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 10 days and the number of days between reviews is 15. Which of the following is the standard deviation of demand during the review and lead time period if the standard deviation of daily demand is 10? 25 73 40 100 50

50

Which of the following is NOT a good reason to hold inventory? a.To build a bank of finished goods to protect customers from a potential strike at your plant. b. As needed to improve company cash flow. c. As needed to shift from one raw material supplier to another. d. To buy ahead in anticipation of significant raw material price increases.

As needed to improve company cash flow

Using the ABC classification system for inventory, which of the following is a true statement? a. You should allocate about 50% of the dollar volume to "B" items b. Generally there are more "A" items than "C" items. c. The "A" items are of high dollar volume d. The "C" items are of moderate dollar volume

The "A" items are of high dollar volume

Which of the following is not a component of total costs in a fixed-quantity inventory system? a. Annual production labor costs b. Annual holding costs c. Annual purchase costs d. Annual ordering costs

annual production labor costs

In a single-period inventory model, critical ratio value indicates the probability of the last unit in the stock being sold. true false

false

In inventory models, high holding costs tend to favor high inventory levels. True False

false

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system. true false

false

Which multi-period inventory system is used for high-priced, critical or important items? a. Optimal-cost b. Fixed-time period c. Fixed-order quantity d. Single-period

fixed order quantity

The managerial and clerical costs to prepare purchase or production orders are called: a.Shortage costs b.Ordering costs c. Logistics costs d. Holding costs

ordering costs

Fixed-time period models tend to have more safety stock than fixed-order quantity models because the inventory is not tracked as closely. true false

true

In a fixed-time period inventory model, the interval of time between orders is fixed and order quantity varies. True False

true

Safety stock inventory levels are affected by the probability of stock out at a given desired service level. True False

true

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged. true false

true

The key difference between a fixed-order quantity inventory model, where demand is known and one where demand is uncertain is in computing the reorder point. true false

true

The marginal analysis indicates that the optimal stocking level (in a newsvendor problem) occurs at the point where the expected benefits derived from carrying the next unit are less than the expected costs for that. true false

true