opma chapter 11
3. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.
T
5. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.
T
Fixed-order quantity inventory models are "event triggered."
T
Fixed-order quantity inventory systems determine the reorder point, R and the order quantity, Q values.
T
Fixed-time period inventory models are "time triggered."
T
If the cost to change from producing one product to producing another were zero the lot size would be very small.
T
In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
T
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
T
Inventory is defined as the stock of any item or resource used in an organization.
T
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.
T
Safety stock can be defined as the amount of inventory carried in addition to the expected demand.
T
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.
T
The fixed-order quantity inventory model favors less expensive items because average inventory is lower.
F
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.
F
The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures
F
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
Breakage
Which of the following is not an assumption of the basic fixed-order quantity inventory model?
Diminishing returns to scale of holding inventory
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
Economic order quality of the model
4. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.
F
Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.
F
Fixed-order quantity inventory models are "time triggered."
F
Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.
F
Fixed-time period inventory models are "event triggered."
F
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.
F
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
Just in time
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
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
67. (p. 367) 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 S = Setup cost or cost of placing an order
S
2. 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.
T
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
Taxes
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
To meet variation in product demand
All firms keep a supply of inventory for the following reasons:
1. To maintain independence of operations 2. To meet variation in product demand. 3. To allow flexibility in production scheduling. 4. To provide a safeguard for variation in raw material delivery time. 5. To take advantage of economic purchase order size.
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
Annualized cost of material
In inventory models, high holding costs tend to favor high inventory levels.
F
Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.
T
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
Work in progress
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 See equation 11.4. 78 times 3 = 234
234
Assuming no safety stock, what is the re-order 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 See equation 11.4. Fifty (50) times ten (10) equals 500.
500
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 Total Annual Cost = Annual Purchase Cost + Annual Ordering Cost + Annual Holding Cost. See equation 11.2.
Annual holding cost, annual ordering cost, annual purschasing cost
Safety stock is not necessary in any fixed-time period system.
F
Shortage costs are precise and easy to measure
F
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
Fixed costs
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
Fixed order quantity
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.
T
The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.
T
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.
T
Using the probability approach we assume that the demand over a period of time is normally distributed.
T
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
To keep stock out of the hands of competitors