Operations Management Chapter 9 (midterm)

A perpetual inventory system requires that A. inventory records are always current. B. inventory is always on order. C. inventory is constantly being produced. D. inventory is always in stock.

A. inventory records are always current.

Which of the following costs is NOT considered an inventory holding​ (or carrying)​ cost? A. inventory transportation costs B. inventory shrinkage costs C. inventory handling costs D. inventory storage costs

A. inventory transportation costs

Which of the following is NOT considered a pressure to hold large​ inventories? A. the cost of insurance B. the need to increase machine utilization C. the potential to reduce stockouts D. the cost of placing an order

A. the cost of insurance

What is the primary lever to reduce cycle​ inventory? A. place orders closer to the time when they must be received B. reduce the lot sizes C. use flexible automation D. improve demand forecasts

B. reduce the lot sizes

Lisa's Card Cache uses ABC analysis. Which of the following statements is NOT true of ABC​ analysis? A. Inventory items are ranked on the basis of dollar usage. B. ​Generally, the Class A items account for approximately 80 percent of the dollar usage. C. ABC analysis allows the company to control inventory shrinkage. D. ABC analysis uses the Pareto chart concept.

C. ABC analysis allows the company to control inventory shrinkage.

Lewis Machine Tools is considering reducing lot size to reduce cycle inventory. Which of the following is a change that should be made for lot size reduction to be​ effective? A. Offer seasonal pricing plans B. Allowing backorders C. Increasing repeatability D. Increase lead times

C. Increasing repeatability

A form of shrinkage called​ ________ occurs when inventory cannot be used or sold at full​ value, owing to model​ changes, engineering​ modifications, or unexpectedly low demand. A. ​life-cycle shrink B. deterioration C. obsolescence D. pilferage

C. obsolescence

_________ items, consisting of raw materials and​ work-in-process inventories, are those items whose required quantity varies with the production plans for other items held in the​ firm's inventory. A. MRO B. Independent demand C. Cycle stock D. Dependent demand

D. Dependent demand

Which of the following can put pressure on a company to carry small levels of​ inventory? A. the potential for stockouts and backorders B. the need to increase workforce productivity C. high ordering cost D. high cost of capital

D. high cost of capital

The primary lever to reduce anticipation inventory is to A. rely on more equipment and labor buffers. B. improve demand forecasts so that fewer surprises come from customers. C. streamline the methods for placing orders and making setups. D. match demand rate with production rate.

D. match demand rate with production rate.

An individual item or product that has an identifying code and is held in inventory somewhere along the supply chain is called a A. stockable unit. B. inventory item. C. MRO. D. ​stock-keeping unit.

D. ​stock-keeping unit.