operation management
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
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
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
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
Manufacturing firms maintain bill of materials (BOM) files, which are simply a sequencing of everything that goes into a final product.
True
The central problem in virtually every waiting line situation is a trade-off decision balancing the costs of adding services with the costs of waiting.
True
Net change MRP systems are "activity" driven.
True
Savings from reduced inventory results in increased profit.
True
A BOM file is also called which of the following? A) Product tree B) Stocking plan C) Inventory usage record D) Production parts plan E) Time bucket schedule
A
A product tree can do which of the following? A) Help to compute component usage B) Reduce product scrap C) Reduce labor overtime D) Reduce regular time labor E) Locate raw material supplies
A
Which of the following is the net requirement using an MRP program if the gross requirement is 1,250 and the inventory on hand is 50? A) 1,200 B) 1,300 C) 1,150 D) 2,450 E) None of these
A
Assuming a 24 hour operation in a warehouse, and an arrival following Poisson distribution with mean rate of 36 per day and service (unloading using a single bay) following exponential distribution with a rate of 48 trucks per day, answer the following question. What is the expected waiting time in the system (in hours) for a typical truck? A) 2 hours B) 1 hour C) 1.5 hour D) 0.25 hour E) 0.5 hour
A) 2 hours
A constant arrival rate is more common in productive systems than a variable arrival rate.
False
A finite population in waiting line management refers to a population that is large enough in relation to the service system so that the change in population size caused by subtraction or additions to the population does not significantly affect the system probabilities.
False
A service system with a high degree of customer contact is less difficult to control than a low degree of customer contact service system.
False
A tellers' window in a bank is an example of a single channel, multiphase queuing system.
False
Because little or no inventory is carried in a service operation, it is easy to separate the operations management functions from marketing in services.
False
Best customer last is a queue discipline discussed in the textbook.
False
Customer contact refers to creation of the service.
False
Effective management of services requires a clear focus on understanding operations, so much so, that it may even require the exclusion of consideration of marketing or personnel.
False
MRP stands for manufacturing requirements planning.
False
The admissions system in a hospital for patients is an example of a single channel, single phase queuing system.
False
The average cost of inventory in the United States is 20 to 25 percent of its value.
False
The costs associated with reduced inventory results in lower profits.
False
The customer arrivals in a queuing system come almost exclusively from finite populations.
False
A BOM file is often called a product structure file or product tree because it shows how a product is put together.
True
A car wash is an example of a single channel, multiphase queuing system.
True
A department of 25 machines is kept running by three operators who respond to randomly occurring equipment problems. An analyst wanting to know whether to add a fourth operator or downsize to two operators would be helped by using queuing theory analysis.
True
A department of 25 machines is kept running by three operators who respond to randomly occurring equipment problems. An analyst who wanted to know how much production was being lost by machines waiting for service could use queuing theory analysis to find out.
True
MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item.
True
MRP is based on dependent demand.
True
The time-phased plan specifying how many and when the firm plans to build each end item is called the master production schedule (MPS).
True
There are different queuing models to fit different queuing situations.
True
Time fences are periods of time having some specified level of opportunity for the customer to make changes.
True
Using the probability approach we assume that the demand over a period of time is normally distributed.
True
Net change MRP reflects the exact status of each item managed by the system in "real time."
True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.
True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.
True
Poka-yoke is roughly translated from Japanese as "avoid mistakes."
True
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 stockout.
True
The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.
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
You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.
True
Which following queue discipline is discussed in the textbook? A) Emergencies first B) Garner-Whitten formula C) Newest customer first D) Patient customers last E) None of these
A) Emergencies first
A roller coaster ride in an amusement park employs which type of queuing system line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
A) Single channel, single phase
In an MRP program, the program accesses the status segment of an inventory record according to specific periods called which of the following? A) Cubed time units B) Time buckets C) BOM units D) Time modules E) Time lines
B
Arrival characteristics in a queuing problem analysis include the length of the queue.
False
If demand for an item is normally distributed, we plan for demand to be twice the average demand and carry two standard deviations worth of safety stock inventory.
False
In a net change MRP system, requirements and schedules are considered rigid and never updated.
False
In inventory models, high holding costs tend to favor high inventory levels.
False
In an MRP problem, A is an MPS item. Every A requires 3 B's and 2 C's. Every B requires 5 C's. All lead times are one period. Initial inventory values for all items are 0. Use lot-for-lot method for order quantities for all items. If gross requirement for A is 400 in period 10, what will be the planned order release for C in period 8? A) 800 B) 1,600 C) 6,800 D) 6,000 E) 1,200
A
Standing in line to buy a ticket for a movie where there are multiple windows to buy tickets is which type of queuing system line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
C) Multichannel, single phase
Which of the following is considered a high-contact service operation? A) On-line brokerage house B) Internet sales for a department store C) Physician practice D) Telephone life insurance sales and service E) Automobile repair
C) Physician practice
Fixed-order quantity inventory models are "time triggered."
False
Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.
False
Fixed-time period inventory models are "event triggered."
False
Fixed-time period inventory models are "time triggered."
False
Gas stations, loading docks, and parking lots have infinite potential length of lines for their respective queuing systems.
False
Generally, determining lot sizes in MRP systems is simple.
False
In a net change MRP program, a change in one item will result in a completely new inventory plan and schedule for every item in the master production schedule.
False
In a waiting line situation, multiple lines occur only when there are multiple servers.
False
Inventory levels of dependent demand items are usually managed by calculations using calculus-driven, cost-minimizing models.
False
Low level coding in MRP indicates the exact status of each item managed by the system in "real time."
False
MRP is least valuable in industries where a number of products are made in batches using the same productive equipment.
False
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.
False
One of the drivers of the direct-to-store (direct distribution) approach is the decrease in trucking industry regulation.
False
Poka-yoke is roughly translated from Japanese as "quality management."
False
Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.
False
Projected available balance is the amount of inventory that is expected only at the beginning of a period.
False
Safety stock is not necessary in any fixed-time period system.
False
Shortage costs are precise and easy to measure.
False
The customer arrivals in a queuing system come almost exclusively from infinite populations.
False
The customer grace period is a time-span having some specified level of opportunity for the customer to make changes.
False
The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to smooth out and become even over time.
False
The demand on a hospital's emergency medical services is considered a controllable arrival pattern of the calling population.
False
The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.
False
The least unit cost method (LUC) lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal.
False
The least unit cost method of lot-sizing adds ordering, stock-out, and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost.
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
The service-system design matrix identifies five alternative forms of service encounters.
False
The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures
False
The term "queue discipline" involves the art of controlling surly and unruly customers who have become irritated by waiting.
False
The time-phased plan specifying how many and when the firm plans to build each end item is called the materials requirements plan (MRP.)
False
The work process involved in providing the service must involve the physical presence of the customer in the system.
False
When implemented correctly, MRP links all areas of the business.
False
The least unit cost method of lot-sizing technique adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost.
True
The master production schedule states the number of items to be produced during specific time periods.
True
The term "encounter" is defined by Webster's Dictionary as "meeting in conflict or battle" and is used to also designate meetings between consumers and service systems.
True
The three main inputs to an MRP system are the bill of materials, the master schedule and the inventory records file.
True
From the list below select the one item that the master scheduler does not do to ensure good master scheduling. A) Include all demands from product sales, warehouse replenishment, spares, and interplant requirements. B) Be involved with customer order promising. C) Be visible to all levels of management. D) Trade off conflicts to make it likely that manufacturing will meet its goals. E) Identify and communicate all problems.
D
In making any decision that affects inventory size, which of the following costs do not need to be considered? A) Holding costs B) Setup costs C) Ordering costs D) Fixed costs E) Shortage costs
D
Which of the following are fixed-time period inventory models? A) The EOQ model B) The least cost method C) The Q model D) Periodic system model E) Just-in-time model
D
In a practical sense, a finite population is one that potentially would form a very long line in relation to the capacity of the serving system.
False
In a practical sense, an infinite queue is one that includes every possible member of the served population.
False
In a price break model of lot sizing the lowest cost quantity is always feasible.
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
The "service blueprint" is a classification of services.
False
The MRP program performs its analysis from the bottom up of the product structure trees, imploding requirements level by level.
False
The economic order quantity (EOQ) lot sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.
False
The economic order quantity (EOQ) lot sizing technique uses the "square root formula" to balance setup cost, carrying cost and cost of stock-outs.
False
The fixed-order quantity inventory model favors less expensive items because average inventory is lower.
False
The lot-for-lot (L4L) lot sizing technique minimizes carrying cost by taking into account setup costs and capacity limitations.
False
A variable arrival rate is more common in waiting line management than a constant arrival rate.
True
An important aspect of service products is that they cannot be inventoried.
True
Computing the quantity of each component that goes into a finished product can be done by expanding (or exploding) each item in a product structure file and summing at all levels.
True
In a net change MRP system, requirements and schedules are updated whenever a transaction is processed that has an impact on the item.
True
In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
True
Longest waiting time in line is a queue discipline discussed in the textbook.
True
Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.
True
The service-system design matrix identifies six forms of service encounters.
True
Lot-for-lot (L4L) is the most common lot sizing technique.
True
MRP is most valuable where a number of products are made in batches using the same productive equipment.
True
MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.
True
MRP stands for material requirements planning.
True
"Projected available balance" is a term referring to unsold finished goods inventory.
False
A modular bill of materials includes items with fractional options.
False
Price-break models deal with the fact that the selling price of an item varies with the order size.
TRue
An input to the material requirements planning (MRP) system is an exception report.
False
An output of MRP is a bill of materials (BOM) file.
False
Which of the following are alternative possible service encounters included in the service-system design matrix? A) Mail contact B) Warranty C) Sales call D) Field service E) None of these
A) Mail contact
In a college registration process, several department heads have to approve an individual student's semester course load. What is the queuing system line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
B) Single channel, multiphase
Which of the following is an example of a finite population in a queuing system? A) People waiting to place their order at a fast food restaurant. B) The departmental faculty in line at the copy machine. C) People waiting in line at an ATM. D) Patients seeking help in a hospital emergency room. E) Taxpayers calling for assistance from the IRS.
B) The departmental faculty in line at the copy machine.
Which of the following is a suggestion for managing queues that is mentioned in the textbook? A) Put up a serpentine lane to keep people from jumping ahead in line B) Use humor to defuse a potentially irritating situation C) Segment the customers D) Assure customers that the wait is fair and inform them of the queue discipline E) Tell people in the queue that each will be served as soon as possible
C) Segment the customers
According to the text, the main differences separating Amazon from other on line retailors are all of the following except A) website and the gigantic list of product offerings. B) multi-tiered strategy any one can sell anything. C) you can return products. D) you can setup website with links to Amazon and get paid for click throughs. E) can be your personal shopping assistant.
C) you can return products.
Platform service business model describes an approach where a) consumers and producers/service creators are brought together for a social cause. b) transaction provider connects the customer and providers and collects the charges. c) an example of a transaction provider would be eBay. d) another model of manufacture is described. A) Option A B) Option B C) Option C D) Option D
Option B,C
A department of 25 machines is kept running by three operators who respond to randomly occurring equipment problems. When an operator is absent, the amount of production being lost by machines waiting for service increases. The analyst can use queuing theory analysis to determine whether to pay overtime to an operator from a different shift or not.
True
A lot-for-lot (L4L) lot sizing technique does not take into account setup costs or capacity limitations.
True
A master production schedule is an input to a material requirements planning (MRP) system.
True
A modular bill of materials is the term for an item that can be produced and stocked as a subassembly.
True
An infinite population in waiting line management refers to a population that is large enough in relation to the service system so that the change in population size caused by subtraction or additions to the population does not significantly affect the system probabilities.
True
An input to the material requirements planning (MRP) system is an inventory records file.
True
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
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
Fixed-order quantity inventory models are "event triggered."
True
Fixed-order quantity inventory systems determine the reorder point, R, and the order quantity, Q, values.
True
Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.
True
Highest-profit customer first is a queue discipline discussed in the textbook.
True
Ideally in waiting line or queuing analysis we want to balance the cost of service capacity with the cost of waiting.
True
Inventory is defined as the stock of any item or resource used in an organization.
True
It is difficult to separate the operations management functions from marketing in services.
True
If the cost to change from producing one product to producing another were zero the lot size would be very small.
true
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
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? A) $1,501,600 B) $1,498,200 C) $500,687 D) $499,313 E) None of these
A
If annual demand is 6,125 units, annual holding cost is $5 per unit, and setup cost per order is $50, which of the following is the EOQ lot size? A) 350 B) 247 C) 23 D) 185 E) 78
A
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? A) Standard deviation of daily demand B) Number of standard deviations for a specific service probability C) Stockout cost D) Economic order quantity E) Safety stock level
A
Which of the following is a suggestion for managing queues presented in the textbook? A) Train your servers to be friendly B) Tell customers that the line should encourage them to come during slack periods C) Give each customer a number D) Periodically close the service channel to temporarily disperse the line E) Use humor to defuse a potentially irritating situation
A) Train your servers to be friendly
A company has recorded the last five days of daily demand on their 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)? A) 120 B) 126 C) 630 D) 950 E) 1,200
C
Firms keep supplies of inventory for which of the following reasons? A) To maintain dependence of operations B) To provide a feeling of security for the workforce C) To meet variation in product demand D) To hedge against wage increases E) In case the supplier changes the design
C
Freezing the master schedule is: A) not truly feasible because down the road it will become slushy again. B) a commitment to precisely follow the master schedule in the future. C) done to avoid the chaos of expediting and resultant overdue orders. D) preserves the master schedule until it is ready to be used. E) rarely attempted by manufacturing firms.
C
In an MRP problem, A is an MPS item. Every A requires 2 B's and 3 C's. Every B requires 5 C's. All lead times are two periods. All initial inventory values are 0. Use lot-for-lot method for order quantities for all items. What is the low level code (LLC) for B and C? A) LLC for B is 2 and C is 1 B) LLC for both B and C are 2 C) LLC for B is 1 and C is 2 D) LLC for B is 0 and C is 1 E) LLC for all items are 1
C
Customers arrive at a single self-serve coffee machine in a busy mall at the rate of 20 per hour, following Poisson distribution. Each customer takes exactly 90 seconds to get his or her coffee. What is the expected number of customers in queue at this coffee machine? A) 1.0 B) 1.5 C) 0.5 D) 2.0 E) 3.0
C) 0.5
Assume the service rate for a queue in a truck-loading operation is 2 trucks per hour. Using the infinite queuing notion for the models presented in the textbook, which of the following is the average service time? A) 2 hours B) 1 hour C) 0.5 hour D) 0.25 hour E) None of these
C) 0.5 hour
Which of the following is not a suggestion for managing queues presented in the textbook? A) Train your servers to be friendly B) Segment the customers C) Determine an acceptable waiting time for your customers D) Inform your customers of what to expect E) Encourage customers to come during slack periods
C) Determine an acceptable waiting time for your customers
Buying a ticket for a college football game where there are multiple windows to buy the ticket at features which type of queuing system line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
C) Multichannel, single phase
In designing service systems, as you go from mail contact to phone contact to face to face total customization, which of the following is most appropriate? A) Sales opportunity decreases while degree of customer/server contact increases. B) Sales opportunity decreases while degree of customer/server contact decreases. C) Sales opportunity increases while degree of customer/server contact decreases. D) Sales opportunity increases while degree of customer/server contact increases. E) None of the above
D) Sales opportunity increases while degree of customer/server contact increases.
In essence, a queuing system includes several major components. Which of the following is not one of them? A) Source population B) Servicing system C) How the customer exits the system D) The queue discipline E) None of these
D) The queue discipline
When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time? A) Normal variation in shipping time B) A shortage of material at the vendor's plant causing backlogs C) An unexpected strike at the vendor's plant D) A lost order E) Redundant ordering systems
E
Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? A) Planning bill of materials file B) Modular bill of materials file C) Super bill of materials file D) Exception report file E) Peg record file
E
Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot size in which these are most nearly equal? A) Kanban B) Just-in-time system C) MRP D) Least unit cost E) Least total cost
E
Which of the following are fixed-order quantity inventory models? A) Economic order quantity model B) The ABC model C) Periodic replenishment model D) Cycle counting model E) P model
A
Which of the following industry types will not benefit greatly from the application of MRP? A) Fabricate-to-order B) Assemble-to-stock C) Assemble-to-order D) Manufacture-to-order E) None of these
A
Which of the following is an input file necessary to run an MRP system? A) Bill of materials (BOM) file B) Quality management report C) Exception reports D) Planned-order schedules E) Purchasing contracts
A
Which of the following is considered a primary report in an MRP system? A) Planned order schedule B) Peg report C) Planning report D) Inventory accuracy report E) Aggregate production plan report
A
Which of the following is most closely related to the reason a firm might implement MRP? A) So they can order the right parts B) So they can order parts sufficient for immediate use C) So they can insure that parts to arrive prior to when they are needed D) To assure appropriate quality levels E) To keep process costs between the LCL and the UCL
A
Which of the following is not included as an inventory holding cost? A) Annualized cost of materials B) Handling C) Insurance D) Pilferage E) Storage facilities
A
The service blueprint makes a distinction between: A) High and low customer contact aspects of the service. B) Those parts of the service performed before payment from those performed after payment. C) Standardized elements of the service and those distinctive customized aspects of the service. D) Customers desiring good service and customers unconcerned with service quality. E) Low and high value-added aspects of the service.
A) High and low customer contact aspects of the service.
Which of the following is a characteristic that can be used to guide the design of service systems? A) Services cannot be inventoried B) Services are all similar C) Quality work means quality service D) Services businesses are inherently entrepreneurial E) Even service businesses have internal services
A) Services cannot be inventoried
Getting an autograph from a famous person might involve standing in which type of queuing line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
A) Single channel, single phase
There are many applications of poka-yokes in service organizations. Which of the following is one of the three-T's used to classify poka-yokes? A) Task B) Time C) Teamwork D) Trust E) Talent
A) Task
A company has recorded the last six days of daily demand on a single product they sell. 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)? A) 540 B) 270 C) 115 D) 90 E) 60
B
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? A) 550 B) 500 C) 715 D) 450 E) 475
B
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? A) 421 B) 234 C) 78 D) 26 E) 312
B
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? A) 576 B) 240 C) 120.4 D) 60.56 E) 56.03
B
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? A) 5,060 B) 2,320 C) 2,133 D) 2,004 E) 1,866
B
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? A) 909 B) 707 C) 634 D) 500 E) 141
B
In an MRP problem, A is an MPS item. Every A requires 2 B's and 3 C's. Every B requires 5 C's. All lead times are two periods. All initial inventory values are 0. Use lot-for-lot method for order quantities for all items. If gross requirement for A is 500 in period 8, what will be the planned order release for B in period 4? A) 0 B) 1,000 C) 500 D) 1,500 E) 6,500
B
MRP systems seek to achieve which of the following? A) Minimize lot sizes B) Determine the number of dependent demand items needed C) Relieve capacity bottlenecks D) Provide a yardstick for future improvements E) Improve on JIT methods
B
Under the lot-for-lot (L4L) lot sizing technique as used in MRP, we would expect which of the following? A) A consistent lag of supply behind demand B) Minimized carrying costs C) Minimized set-up costs D) A just in time management philosophy E) Minimized quality problems
B
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? A) 1.28 B) 1.64 C) 1.96 D) 2.00 E) 2.18
B
When developing inventory cost models, which of the following are not included as costs to place an order? A) Phone calls B) Taxes C) Clerical D) Calculating quantity to order E) Postage
B
Which of the following is a perpetual system for inventory management? A) Fixed-time period B) Fixed-order quantity C) P model D) First-in-first-out E) The wheel of inventory
B
Which of the following is an input to the master production schedule (MPS)? A) Inventory records file B) The aggregate plan C) The bill of materials D) The exception report E) Planned order schedules
B
Which of the following is considered a secondary report in an MRP system? A) Planned order schedule B) Exceptions reports C) Inventory record D) Firm orders from known customers E) Engineering change reports
B
Which of the following is one of the categories of manufacturing inventory? A) Economic order inventory B) Work-in-process C) Quality units D) JIT inventory E) Re-order point
B
Which of the following is one of the main purposes of a MRP system? A) Educate personnel in basic work rules B) To determine the amount of materials needed to produce each end item. C) Stimulate the work force D) Decrease labor requirements E) Increase inventory accuracy
B
Which of the following is usually included as an inventory holding cost? A) Order placing B) Breakage C) Typing up an order D) Quantity discounts E) Annualized cost of materials
B
Which of the following refers to the physical presence of the customer in a service system? A) Creation of the service B) Customer contact C) Intermittent production D) Continuous production E) None of these
B) Customer contact
Every service has a service package, which is defined as a bundle of goods and services provided in some environment. The service package consists of five features. Which of the following is not one of these features? A) Supporting facility B) Facilitating services C) Information D) Explicit Services E) Implicit Services
B) Facilitating services
Which of the following is an alternative possible service encounter included in the service-system design matrix? A) Face-to-face distance B) Internet C) Questionnaire response D) Automated teller machine (ATM) E) Response card encounter
B) Internet
Which of the following is not a queue discipline discussed in the textbook? A) First come, first served B) Last in, first out C) Limited needs D) Shortest processing time E) Best customer first
B) Last in, first out
In the service-system design matrix, a face-to-face loose specs service encounter is expected to have which of the following? A) Low sales opportunity B) Low production efficiency C) High production efficiency D) Low degree of customer/server contact E) None of these
B) Low production efficiency
In the service-system design matrix, a face-to-face total customization service encounter is expected to have which of the following? A) Low sales opportunity B) Low production efficiency C) High production efficiency D) Low degree of customer/server contact E) None of these
B) Low production efficiency
The "line of visibility" is a feature of: A) a single-channel, single phase queuing system. B) the service blueprint. C) an entertainment activity for people waiting in line for a service. D) a waiting line that allows visibility of the server(s) tending to customers in front of you. E) None of these
B) the service blueprint.
The acronym ERP stands for: A) Executive reliability profile—A human resources program that identifies fast-track middle managers. B) Erratic response parameter—A quality metric indicating that a process is in or out of statistical control. C) Enterprise resource planning—A data base of that ties together all application programs in a firm. D) Emergency response plan—A document required by government indicating planned responses to emergency situations. E) Elevated reply protocol—A list of executives authorized to deal with difficult customer concerns.
C
We would expect to see which of the following in an MRP system's inventory status file? A) End items produced B) Late/early delivery records C) Scrap losses D) Labor efficiency E) Computer errors
C
Which of the following can be used for lot sizing in an MRP system? A) Low-level coding B) Time bucket size C) Least unit cost D) Inventory record file E) Peg inventory
C
Which of the following industry types have high expected benefits from the application of MRP? A) Fabricate-to-order B) Hospitals C) Assemble-to-order D) Aircraft manufacturers E) Oil refineries
C
Which of the following industry types have high expected benefits from the application of MRP? A) Fabricate-to-stock B) Fabricate-to-order C) Assemble-to-stock D) Continuous process E) Service and repair parts
C
Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal? A) Economic order quantity B) Lot-for-lot C) Least total cost D) Least unit cost E) ABC analysis
C
Which of the following is an assumption of the basic fixed-order quantity inventory model? A) Lead times are averaged B) Ordering costs are variable C) Price per unit of product is constant D) Back orders are allowed E) Stock-out costs are high
C
Which of the following is an input file necessary to run an MRP system? A) Exception report B) Computer-aided-design files C) Inventory records file D) Personnel files E) Planned order schedule
C
Which of the following is not an assumption of the basic fixed-order quantity inventory model? A) Ordering or setup costs are constant B) Inventory holding cost is based on average inventory C) Diminishing returns to scale of holding inventory D) Lead time is constant E) Demand for the product is uniform throughout the period
C
Which of the following is the net requirement using an MRP program if the gross requirement is 1,000 and the inventory on hand is 500? A) 1,000 B) 950 C) 500 D) 400 E) 350
C
Which of the following is the planned-order release using an MRP program if the gross requirement is 5,000, inventory on hand is 1,200, and planned receipts are 800? A) 7,000 B) 4,200 C) 3,000 D) 2,000 E) 1,200
C
Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function? A) Annual purchasing cost, annual ordering cost, fixed cost B) Annual holding cost, annual ordering cost, unit cost C) Annual holding cost, annual ordering cost, annual purchasing cost D) Annual lead time cost, annual holding cost, annual purchasing cost E) Annual unit cost, annual set up cost, annual purchasing cost
C
For an infinite queuing situation, if the arrival rate for loading trucks is 5 trucks per hour, what is the mean time between arrivals? A) 5 hours B) 2.5 hours C) 0.2 hour D) 0.1 hour E) None of these
C) 0.2 hour
Buying food at a large food store with multiple checkout counters features which type of queuing system line structure? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
C) Multichannel, single phase
Machine breakdown and repair in a twelve machine factory having one repair mechanic would develop which type of queuing system line structure concerning machine breakdowns? A) Single channel, single phase B) Single channel, multiphase C) Multichannel, single phase D) Multichannel, multiphase E) None of these
C) Multichannel, single phase
Which of the following is a suggestion for managing queues that is mentioned in the textbook? A) Put up a serpentine lane to keep people from jumping ahead in line B) Use humor to defuse a potentially irritating situation C) Train your servers to be friendly D) Assure customers that the wait is fair and inform them of the queue discipline E) Tell people in the queue that each will be served as soon as possible
C) Train your servers to be friendly
One of the main purposes of a MRP system is which of the following? A) Track inventory levels. B) Create productive capacity. C) Decrease layers of management. D) Develop schedules specifying when each component should be ordered or produced. E) Upgrade manufacturing's professionalism.
D
Which of the following is a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost? A) Economic order quantity B) Lot-for-lot C) Least total cost D) Least unit cost E) Inventory item averaging
D
Which of the following is considered a primary report in an MRP system? A) Planning reports B) Performance reports C) Exception reports D) Planned order schedules E) Cycle counting reports
D
Which of the following is not one of the categories of manufacturing inventory? A) Raw materials B) Finished products C) Component parts D) Just-in-time E) Supplies
D
Which of the following is the planned-order release using an MRP program if the gross requirement is 670 and the inventory on hand is 600? A) 670 B) 600 C) 530 D) 70 E) None of these
D
Customers arrive at a common queue at the coffee station with two identical coffee machines in a busy mall at the rate of 48 per hour, following Poisson distribution. Each customer mixes his or her specialty coffee taking 2 minutes on an average following an exponential process. What is the expected number of customers in the system at this coffee station? A) Infinity B) 2.844 C) 2.444 D) 4.444 E) 3
D) 4.444
In the service-system design matrix, an internet and on-site technology service encounter is expected to have which of the following? A) High sales opportunity B) High degree of customer/server contact C) Low production efficiency D) High production efficiency E) None of these
D) High production efficiency
In the service-system design matrix, a mail contact service encounter is expected to have which of the following? A) High sales opportunity B) High degree of customer/server contact C) High production efficiency D) Low sales opportunity E) None of these
D) Low sales opportunity
Which of the following are the three major components of a queuing system? A) The source population, how customers exit the system, and the queuing discipline. B) The number of servers, the service speed and the waiting line. C) The source population, how the customer exits the system, and the servicing system. D) The source population and the way customers arrive at the system, the serving systems, and how customers exit the system. E) The service speed, the queue discipline and the waiting line.
D) The source population and the way customers arrive at the system, the serving systems, and how customers exit the system.
There are many applications of poka-yokes in service organizations. Which of the following is one of the three-T's used to classify poka-yokes? A) Talent B) Teamwork C) Trust D) Treatment E) Time
D) Treatment
If annual demand is 12,000 units, annual holding cost is $15 per unit, and setup cost per order is $25, which of the following is the EOQ lot size? A) 2,000 B) 1,200 C) 1,000 D) 300 E) 200
E
In a typical inventory status record which of the following would you not expect to see? A) Scrap allowance B) Order quantity C) Gross requirements D) Planned-order releases E) Lost items
E
In an MRP problem, A is an MPS item. Every A requires 2 B's and 3 C's. Every B requires 5 C's. All lead times are two periods. Initial inventory values for A is 100, B is 200 and C is 0. Use lot-for-lot method for order quantities for all items. If gross requirement for A is 800 in period 9, what will be the planned order release for B in period 5? A) 1,600 B) 1,400 C) 700 D) 800 E) 1,200
E
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? A) The product of average daily demand times a standard deviation of lead time B) A z value times the lead time in days C) The standard deviation of vendor lead time times the standard deviation of demand D) The product of lead time in days times the standard deviation of lead time E) The product of the standard deviation of demand variability and a z-score relating to a specific service probability.
E
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? A) $849 B) $1,200 C) $1,889 D) $2,267 E) $2,400
E
Which of the following is an input to the master production schedule? A) Bill of materials (BOM) file B) Inventory records file C) Exception reports D) Planned-order schedules E) None of these
E
Which of the following is an input to the master production schedule? A) Prototype products from product development B) Aggregate component schedule C) Peg reports D) Exception reports E) Forecasts of demand from customers
E
Which of the following is not a lot sizing technique used in MRP systems? A) Lot-for-lot (L4L) B) Economic order quantity (EOQ) C) Least total cost (LTC) D) Least unit cost (LUC) E) Warehouse loading factor (WLF)
E
Which of the following is not a production activity report generated by MRP? A) Exception report B) Planning report C) Performance control report D) Planned-order schedules E) Bill of materials report
E
Which of the following is not a reason to carry inventory? A) To provide a safeguard for variation in raw material delivery time B) To take advantage of economic purchase-order size C) To maintain independence of operations D) To meet variation in product demand E) To keep the stock out of the hands of competitors
E
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? A) C B) TC C) H D) Q E) S
E
Assuming a 24 hour operation in a warehouse, and an arrival following Poisson distribution with mean rate of 36 per day and service (unloading using a single bay) following exponential with a rate of 48 trucks per day, answer the following question. What is the expected number of trucks in the system? A) 2.25 B) 1.5 C) 2 D) 1 E) 3
E) 3
A company is concerned about the number of customers that have to wait for service in their customer service department. Assume the rate at which customers arrive is 12 per hour. Using the infinite queuing notion for the models presented in the textbook, which of the following is the mean time between arrivals? A) 12 minutes B) 6 minutes C) 2 minutes D) 1 minute E) None of these
E) None of these
Which of the following is not a suggestion for managing queues presented in the textbook? A) Try to divert your customer's attention when waiting B) Segment the customers C) Encourage customers to come during a slack period D) Train your servers to be friendly E) Periodically close the service channel to temporarily disperse the line
E) Periodically close the service channel to temporarily disperse the line
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
One of the daily, delicate balancing acts that logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.
True
One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.
True
One of the drivers of the direct-to-store (direct distribution) approach is the upstream migration of value-added logistics services.
True
Poka-yokes are procedures that block the inevitable mistake from becoming a service defect.
True
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
Safety stock can be defined as the amount of inventory carried in addition to the expected demand.
True
Services often take the form of repeated encounters involving face-to-face interactions.
True
Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.
True
The "sawtooth effect," is named after the jagged shape of the graph of inventory levels over time.
True
The Poisson probability distribution is used in waiting line management when we are interested in the number of arrivals to a queue during some fixed time period.
True
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 back-ordered inventory.
True
The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to become more "lumpy."
True
The demand on a hospital's emergency medical services is considered an uncontrollable arrival pattern of the calling population.
True
The economic order quantity (EOQ) lot sizing technique uses the "square root formula" to balance setup cost and carrying cost.
True
The least total cost method (LTC) lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal.
True
