OPSY Chapter 12

Which of the following does NOT belong to ordering costs? a) order processing b) clerical support c) cost of supplies d)interest payments

interest payments

ABC analysis divides on-hand inventory into three classes, based on: a) Unit price b) Annual demand c) The number of units on hand d) Annual dollar value

Annual dollar value

The appropriate level safety stock is typically determined by: a) Minimizing an expected stock out cost b) Choosing the level of safety stock that assures a given service level c) Carrying sufficient safety stock so as to eliminate all stock outs d) Annual demand

Choosing the level of safety stock that assures a given service level

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

How many units should be ordered

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 record are periodically verified d) All of the above

Is a process by which inventory record are periodically verified

Which of the following is NOT a type of inventory? a) finished goods b) MRP c) raw material d) work-in-process

MRP

Extra units in inventory to help reduce stock outs are called: a) Reorder point b) Safety stock c) Just-in-time inventory d) All of the above

Safety stock

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 doesn't require the assumption of negligible lead time c)The production order quantity model doesn't require the assumption of instantaneous delivery d) All of the above

The EOQ model doesn't require the assumption of negligible lead time

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

When to place an order and how much of an item to order

A system that triggers ordering on a uniform time basis is called a) a fixed-quantity system. b) a fixed-period system. c) an EOQ system. d) a reorder point system.

a fixed-period system.

A statistical model applicable when product demand or any other variable is not known but can be specified by means of a probability distribution is referred as: a) a quantity discount model. b) a robust model. c) the EOQ. d) a probabilistic model

a probabilistic model

What is the cost to prepare a machine or process for production? a) ordering cost b) holding cost c) preparation cost d) setup cost

setup cost

For seasonal products, the service level should be set to equal: a) overage cost / (overage cost + shortage cost) b) overage cost / (overage cost minus shortage cost) c) shortage cost / (overage cost minus shortage cost) d) shortage cost / (overage cost + shortage cost)

shortage cost / (overage cost + shortage cost)

What is a system for ordering items that have little or no value at the end of a sales period? a) EOQ b) ROP c) production order quantity model d) single-period inventory model

single-period inventory model

One use of inventory is: a) to ensure that item cost is maximized. b) to provide a hedge against inflation. c) to tightly synchronize production and distribution processes. d) to tightly synchronize a firm's production with its customers' demand.

to provide a hedge against inflation