mktg 372 final ch 20
Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order-quantity inventory model?
"S"
A company is planning for its financing needs and uses the basic fixed-order-quantity inventory model. Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000, setup cost of $32, a holding cost per unit per year of $4, an EOQ of 400 units, and a cost per unit of inventory of $150?
1,501,600
Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?
1.64
If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?
100
If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order-quantity model?
2,320
Using the fixed-order-quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80, and a holding cost per unit per year of $4?
2,400
Which of the following values for z should we use in as a safety stock calculation if we want a service probability of 98 percent?
2.05
If it takes a supplier 4 days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time?
20
Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?
234
If annual demand is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order-quantity model?
240
A company has recorded the last six days of daily demand on a single product it sells. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
270
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 over the review and lead time period if the standard deviation of daily demand is 10?
50
Assuming no safety stock, what is the reorder point (R) given an average daily demand of 50 units, a lead time of 10 days, and 625 units on hand?
500
A company has recorded the last five days of daily demand on its only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
630
If annual demand is 50,000 units, the ordering cost is $25 per order, and the holding cost is $5 per unit per year, which of the following is the optimal order quantity using the fixed-order-quantity model?
707
Using the fixed-time-period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity?
863
Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?
A items get 15 percent, B items get 35 percent, and C items get 50 percent.
The Pareto principle is best applied to which of the following inventory systems?
ABC classification
Using the fixed-time-period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a z of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity?
About 1,686
A company wants to determine its reorder point (R). Demand is variable and the company wants to build a safety stock into R. The company wants to have a service probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days, and the standard deviation of usage during lead time is 2, which of the following is the desired value of R
About 27.3
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 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?
About 27.7
If it takes a supplier 2 days to deliver an order once it has been placed and the daily demand for 3 days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time?
About 3.06
Using the fixed-time-period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity?
About 42.3
A company wants to determine its reorder point (R). Demand is variable and the company wants to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired z value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R?
About 66
Which of the following is the set of all cost components that make up the fixed-order-quantity total annual cost (TC) function?
Annual holding cost, annual ordering cost, annual purchasing cost
Which of the following is not included as an inventory holding cost?
Annualized cost of materials
Which of the following is usually included as an inventory holding cost?
Breakage
Which of the following is a fixed-order-quantity inventory model?
Economic order quantity model
True or false. Fixed-order-quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.
FALSE
True or false. The average cost of inventory in the United States is 20 to 25 percent of its value.
FALSE
In making any decision that affects inventory size, which of the following costs do not need to be considered?
Fixed costs
If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text), and if the profit resulting from the last unit being sold (Cu) is $0.90 and the loss resulting from that unit if it is not sold (Co) is $0.50, which of the following is the probability of the last unit being sold?
Greater than 0.357
If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text), and if the profit resulting from the last unit being sold (Cu) is $120 and the loss resulting from that unit if it is not sold (Co) is $360, which of the following is the probability of the last unit being sold?
Greater than 0.75
Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?
Ordering cost
Which of the following is a fixed-time-period inventory model?
Periodic system model
Which of the following is an assumption of the basic fixed-order-quantity inventory model?
Price per unit of product is constant.
When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?
Redundant ordering systems
Which of the following is not an assumption of the basic fixed-order-quantity inventory model?
Returns to scale of holding inventory are diminishing.
In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order-quantity inventory model, which of the following must be computed first?
Standard deviation of daily demand
True or false. In the fixed-time-period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.
TRUE
True or false. Savings from reduced inventory results in increased profit.
TRUE
Using the ABC classification system for inventory, which of the following is a true statement?
The A items are of high dollar volume.
To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R?
The product of the standard deviation of demand variability and a z score relating to a specific service probability
Which of the following is not a reason to carry inventory?
To keep the stock out of the hands of competitors
Firms keep supplies of inventory for which of the following reasons?
To meet variation in product demand
Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?
When the record shows positive balance but a backorder was written
Which of the following is one of the categories of manufacturing inventory?
Work-in-process
True or false. Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.
false
True or false. Fixed-order-quantity inventory models are "time triggered."
false
True or false. Fixed-time-period inventory models are "event triggered."
false
True or false. If demand for an item is normally distributed, we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.
false
True or false. In a price-break model of lot sizing, the lowest cost quantity is always feasible.
false
True or false. In inventory models, high holding costs tend to favor high inventory levels.
false
True or false. One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to determine the level of quality to specify.
false
True or false. One of the drivers of the direct-to-store (direct distribution) approach is the decrease in trucking industry regulation.
false
True or false. Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.
false
True or false. Safety stock is not necessary in any fixed-time-period system.
false
True or false. Shortage costs are precise and easy to measure.
false
True or false. The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.
false
True or false. The costs associated with reduced inventory results in lower profits.
false
True or false. The fixed-order-quantity inventory model favors less expensive items because average inventory is lower.
false
True or false. The fixed-time-period inventory system has a smaller average inventory than the fixed-order-quantity system because it must also protect against stock outs during the review period when inventory is checked.
false
True or false. The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.
false
True or false. The standard fixed-time-period model assumes that inventory is never counted but determined by EOQ measures.
false
Which of the following is a perpetual system for inventory management?
fixed order quantity
Which of the following IS NOT one of the categories of manufacturing inventory?
raw materials
When developing inventory cost models, which of the following is not included as a costs to place an order?
taxes
True or false. An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.
true
True or false. Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.
true
True or false. Fixed-order-quantity inventory models are "event triggered."
true
True or false. Fixed-order-quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.
true
True or false. Fixed-time-period inventory models are "time triggered."
true
True or false. Fixed-time-period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.
true
True or false. If the cost to change from producing one product to producing another were zero, the lot size would be very small.
true
True or false. In a price-break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.
true
True or false. In a price-break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price.
true
True or false. In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
true
True or false. Inventory is defined as the stock of any item or resource used in an organization.
true
True or false. One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to determine how large the orders to vendors should be.
true
True or false. One of the basic purposes of inventory analysis in manufacturing and stock keeping services is to specify when items should be ordered.
true
True or false. One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.
true
True or false. One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.
true
True or false. One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed
true
True or false. One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.
true
True or false. One of the drivers of the direct-to-store (direct distribution) approach is the upstream migration of value-added logistics services.
true
True or false. Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.
true
True or false. Price-break models deal with the fact that the selling price of an item varies with the order size.
true
True or false. Safety stock can be computed when using the fixed-order-quantity inventory model by multiplying a z value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.
true
True or false. Safety stock can be defined as the amount of inventory carried in addition to the expected demand.
true
True or false. Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.
true
True or false. The "sawtooth effect" is named after the jagged shape of the graph of inventory levels over time.
true
True or false. The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting backordered inventory.
true
True or false. The fixed-order-quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and, therefore, quicker response to a potential stock out.
true
True or false. The fixed-order-quantity inventory model requires more time to maintain because every addition or withdrawal is logged.
true
True or false. 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
True or false. Using the probability approach, we assume that the demand over a period of time is normally distributed.
true
True or false. When stocked items are sold, the optimal inventory decision using marginal analysis is to stock that quantity where the probable profit from the sale or use of the last unit is equal to or greater than the probable losses if the last unit remains unsold.
true
True or false. You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.
true
