MG 403 Final

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost __________ per year in total annual inventory costs. $400 $800 $1200 Zero; this is a class C item. Cannot be determined because unit price is not known.

$800

In the basic EOQ model, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately 24 100 141 490 600

141

Ten digital anemometers are tested for 200 hours each. One failed at 20 hours; all others completed the test. The MTBF is -------------. cannot calculate from information provided 1/1980 hours 1980 hours 2000 hours 1820 hours

1820 hours

Ten high-technology batteries are tested for 200 hours each. One failed at 20 hours; another failed at 140 hours; all others completed the test. The MTBF is ----------------. 1760 hours 1980 hours 880 hours cannot calculate from information provided 920 hours

880 hours

Instead of comparing the salaries of Detroit autoworkers to foreign autoworkers to determine if Union labor prices are the cause of Detroit's financial woes, which of the following should be used? labor content per vehicle labor productivity total production A or B None of the above, salary is the best comparison.

A or B

Which of the following was not a factor in determining the location of Intel's Arizona plant? skilled labor availability U.S. laws to protect intellectual property tax breaks from local and regional government proximity to Intel's California headquarters All of the above were key factors.

All of the above were key factors.

Which of the following is a reliability tactic? improving individual components increasing repair speed providing redundancy Both (A) and (C) above (A), (B), and (C) above

Both (A) and (C) above

In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately. True False

False

The two main tactics for improving maintenance are

Implementing or improving preventive maintenance Increasing repair capabilities or speed

Which of the following statements regarding the center-of-gravity method is false? It is designed to minimize the maximum possible travel distance to any location. The optimal x- and y-coordinates are calculated separately The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water. The weights used are the quantity of goods moved to or from each location. The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented.

It is designed to minimize the maximum possible travel distance to any location.

Which of the following statements regarding the production order quantity model is true? It applies only to items produced in the firm's own production departments. It relaxes the assumption that all the order quantity is received at one time. It relaxes the assumption that the demand rate is constant. It minimizes the total production costs. It minimizes inventory.

It relaxes the assumption that all the order quantity is received at one time.

Evaluating location alternatives by comparing their composite (weighted-average) scores involves a. factor rating analysis b. cost-volume analysis c. transportation model analysis d. linear regression analysis e. crossover analysis

a. factor rating analysis

The appropriate level of safety stock is typically determined by: a. minimizing an expected stockout cost b. choosing the level of safety stock that assures a given service level c. carrying sufficient safety stock so as to eliminate all stockouts d. annual demand

b. choosing the level of safety stock that assures a given service level

The appropriate maintenance policy is developed by balancing preventative maintenance costs with breakdown maintenance costs. The problem is that: a. preventative maintenance costs are very difficult to identify b. full breakdown costs are seldom considered c. preventative maintenance should be performed, regardless of the cost d. breakdown maintenance must be performed, regardless of the cost

b. full breakdown costs are seldom considered

Extra units that are held in inventory to reduce stockouts are called: a. reorder point b. safety stock c. just-in-time delivery d. all of the above

b. safety stock

The two most important inventory-based questions answered by the typical inventory model are: a. when to place an order and the cost of the order b. when to place an order and how much of an item to order c. how much of an item to order and the cost of the order d. how much of an item to order and with whom the order should be placed

b. when to place an order and how much of an item to order

If Fender Guitar pays $30 per day to a worker in its Ensenada, Mexico, plant, and the employee completes four instruments per 8-hour day, the labor cost/unit is a. $30.00 b. $3.75 c. $7.50 d. $4.00 e. $8.00

c. $7.50

What is the major difference in focus between location decisions in the service sector and in the manufacturing sector? a. There is no difference in focus b. The focus in manufacturing is revenue maximization, while the focus in service is cost minimization. c. The focus in service is revenue maximization, while the focus in manufacturing is cost minimization. d. The focus in manufacturing is on raw materials, while the focus in service is on labor.

c. The focus in service is revenue maximization, while the focus in manufacturing is cost minimization.

A regional bookstore chain is about to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ which of the following tools of analysis? a. assembly-line balancing b. load-distance analysis c. center-of-gravity model d. linear programming e. all of the above

c. center-of-gravity model

Cycle counting: a. provides a measure of inventory turnover b. assumes that all inventory records must be verified with the same frequency c. is a process by which inventory records are periodically verified d. all of the above

c. is a process by which inventory records are periodically verified

The process that is intended to find potential failures and make changes or repairs is known as: a. breakdown maintenance b. failure maintenance c. preventative maintenance d. all of the above

c. preventative maintenance

The difference(s) between the basic EOQ model and the production order quantity model is (are) that: a. the production order quantity model does not require the assumption of known, constant demand b. the EOQ model does not require the assumption of negligible lead time c. the production order quantity model does not require the assumption of instantaneous delivery d. all of the above

c. the production order quantity model does not require the assumption of instantaneous delivery

Geographic Information Systems can assist the location decision by ------- -----. automating center-of-gravity problems computerizing factor rating analysis combining geography with demographic analysis updating transportation method solutions giving good Internet placement for virtual storefronts

combining geography with demographic analysis

The factors involved in location decisions include: a. foreign exchange b. attitudes c. labor productivity d. all of the above

d. all of the above

ABC analysis divides on-hand inventory into three classes, based on: a. unit price b. the number of units on hand c. annual demand d. annual dollar values

d. annual dollar values

The EOQ model with quantity discounts attempts to determine: a. the lowest amount of inventory necessary to satisfy a certain service level b. the lowest purchase price c. whether to use a fixed-quantity or fixed-period order policy d. how many units should be ordered e. the shortest lead time

d. how many units should be ordered

The reliability of a system with n independent components equals: a. the sum of the individual reliabilities b. the minimum reliability among all components c. the maximum reliability among all components d. the product of the individual reliabilities e. the average of the individual reliabilities

d. the product of the individual reliabilities

As the number of components in a system connected in parallel decreases, all other things being equal, the reliability of the system usually ---------------. increases stays the same decreases increases, then decreases decreases, then increases

decreases

______ maintenance partners operators with maintenance personnel to observe, check, adjust, clean, and notify a. partnering b. operator c. breakdown d. six sigma e. autonomous

e. autonomous

On the cost-volume analysis chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which: a. fixed costs are equal for two alternatives locations b. variable costs are equal for two alternative locations c. total costs are equal for all alternative locations d. fixed costs equal variable costs for one location e. total costs are equal for two alternative locations

e. total costs are equal for two alternative locations

Autonomous maintenance occurs when -----------------. employees are empowered to observe, check, adjust, clean, and notify a remote computer system signals the need for breakdown maintenance a remote computer system signals the need for preventative maintenance employees perform their own breakdown maintenance None of the above

employees are empowered to observe, check, adjust, clean, and notify

A system is composed of three components A, B, and C. All three must function for the system to function. There are currently no backups in place. The system has a reliability of 0.966. If a b unchanged less than 0.966 greater than it would be if a backup were also installed for component B greater than 0.966 none of the above

greater than 0.966

A system is composed of three components A, B, and C. All three must function for the system to function. There are currently no backups in place. The system has a reliability of 0.966. If a backup is installed for component A, the new system reliability will be --------------. greater than 0.966 less than 0.966 greater than it would be if a backup were also installed for component B unchanged equal to the reliability of the backup installed for component A

greater than 0.966

The two main tactics for improving reliability are

improving individual components providing redundancy

The reason fast food restaurants often are found in close proximity to each other is they enjoy competition location clustering near high traffic flows low cost availability of skilled labor all of the above

location clustering near high traffic flows

The objective of maintenance and reliability is to ----------------. ensure that breakdowns do not affect the quality of the products ensure that no breakdowns will ever occur ensure that preventive maintenance costs are kept as low as possible maintain the capability of the system ensure that maintenance employees are fully utilized

maintain the capability of the system

When quantity discounts are allowed, the cost-minimizing order quantity -- -------. is always an EOQ quantity minimizes the sum of holding and ordering costs minimizes the unit purchase price may be a quantity below that at which one qualifies for that price minimizes the sum of holding, ordering, and product costs

minimizes the sum of holding, ordering, and product costs

What is the formula for the mean time between failures

number of unit hours of operating time / number of failures

A jewelry store is more likely than a jewelry manufacturer to consider __________ in making a location decision. transportation costs cost of raw materials parking and access climate taxes

parking and access

Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. The term associated with this phenomenon is ----------. bureaucratic risk political risk legislative risk judicial risk democratic risk

political risk

The probability that a product will function properly for a specified time under stated conditions is functionality maintenance durability reliability fitness for use

reliability

The proper quantity of safety stock is typically determined by using a single-period model carrying sufficient safety stock so as to eliminate all stockouts multiplying the EOQ by the desired service level setting the level of safety stock so that a given stockout risk is not exceeded minimizing total costs

setting the level of safety stock so that a given stockout risk is not exceeded

A disadvantage of the fixed-period inventory system is that -------------. it involves higher ordering costs than the fixed quantity inventory system additional inventory records are required the average inventory level is decreased since there is no count of inventory during the review period, a stockout is possible orders usually are for larger quantities

since there is no count of inventory during the review period, a stockout is possible

For a machine to be a good candidate for preventive maintenance ---------- ----. the consequences of failure must exceed the cost of preventive maintenance and the MTBF distribution must have a large standard deviation the consequences of failure must exceed the cost of preventive maintenance and the MTBF must be relatively low the consequences of failure must exceed the cost of preventive maintenance and the MTBF distribution must have a relatively low standard deviation the consequences of failure must exceed the cost of preventive maintenance and the MTBF must be relatively high the consequences of failure must be relatively unknown and, therefore, risky

the consequences of failure must exceed the cost of preventive maintenance and the MTBF distribution must have a relatively low standard deviation

Two of the most basic inventory questions answered by the typical inventory model are -----. timing and cost of orders quantity and cost of orders timing and quantity of orders order quantity and service level ordering cost and carrying cost

timing and quantity of orders

The primary goal in the basic fixed order quantity model is ----------. to calculate the reorder point, so that replenishments take place at the proper time to minimize the sum of carrying cost and holding cost to maximize the customer service level to minimize the sum of setup cost and holding cost to calculate the optimum safety stock

to minimize the sum of setup cost and holding cost

The center-of-gravity method does not take into consideration the ----------. location of markets volume of goods shipped to the markets value of the goods shipped combination of volume and distance center-of-gravity method considers none of the above

value of the goods shipped

Which of the following is usually not one of the top considerations in choosing a country for a facility location? availability of labor and labor productivity exchange rates attitude of governmental units zoning regulations location of markets

zoning regulations