Boo

Which of the following statements about 'A', 'B', and 'C' items is correct? The most valuable items are 'B' items. 'C' items are tightly monitored. 'A' items are generally ordered in small quantities. 'A', 'B', and 'C' items are ordered with the same frequency.

'A' items are generally ordered in small quantities.

There will generally be few ___ items and many ___ items. 'A', 'C' 'C', 'A' 'B', 'A' 'C', 'B'

'A', 'C'

What is your economic order quantity if the annual demand is 100 units, the order placement cost is $25, and the holding cost per unit per year is $50? a. 10 units b. 50 units c. 100 units d. 200 units

10 units

Which of the following z-scores will you use to be able to meet demand from inventory 99% of the time? 1.96 2.33 3.0 1.65

2.33

If demand is normally distributed with mean demand = 12 units/day, your average lead time is 3 days, and your standard deviation of demand during lead time is 7.6, what is your reorder point? Assume your desired CSL is 90%. 46 54 10 36

46

If D = 30 units/week, K = $120/order, and H = $1.5/unit/year, the EOQ will be approximately equal to (assume 52 weeks) 408 69 500 322

500

Which of the following best describes ABC analysis? ABC analysis requires the use of complex algorithms. ABC analysis uses letters instead of numbers or names to identify SKUs. ABC analysis helps you tailor ordering practices based on relative item values. ABC analysis is a one size fits all approach to managing SKUs.

ABC analysis helps you tailor ordering practices based on relative item values.

According to the EOQ model, what happens when your order quantity increases? Annual ordering costs increase Total annual costs increase Average cycle inventory increases The value of H increases

Average cycle inventory increases

Factors that tend to reduce the need for inventory include which of the following? -Increasing supply lead times -Decreasing supply uncertainty -Increasing number of new SKUs -Decreasing SKU cost

Decreasing supply uncertainty

If the annual cost of goods sold goes down by 10%, to maintain the same inventory turnover ratio, the average value of inventory will need to increase by 10%.

False

In an ABC analysis of a firm's SKUs, C items make up 20% of the total SKU count and collectively account for 80% of total usage.

False

Inventory Turnover is defined as Current Inventory/Average Daily Usage.

False

The optimal order quantity occurs when your ordering costs are twice the size of your inventory carrying costs.

False

Tracking your days of inventory supply can help you align production to market demand. However, it provides no insight to help you manage risk.

False

______ measures the ability to fulfil an order from inventory. Days of supply Inventory turnover Stockout risk Fill rate

Fill rate

Cycle inventory is most closely associated with which of the following? -Unreliable suppliers -Demand growth -Order quantities -In-transit inventory

Order quantities

Which of the following is the most effective way to reduce your order quantity (Q)? Reduce the cost of carrying inventory Sell less Increase the unit price Reduce the order cost

Reduce the order cost

A CSL defines your desired probability of being able to meet demand from inventory.

True

The assumptions of the EOQ model are not very realistic, but the model is quite robust.

True

The standard deviation of demand during lead time takes both demand and lead time variability into account.

True

Which of the following might be expected to be an "A" item SKU at a university? a particular type of pen a ream of paper a $30,000 vehicle a computer monitor

a $30,000 vehicle

If annual demand is 24,000 units, and the order quantity is 3,000 units, which of the following accurately describes the decision-making environment? a. The annual number of order placements will be 8, and average inventory levels will be 1,500 b. The annual number of order placements will be 8, and average inventory levels will be 3,000 c. The annual number of order placements will be 12, and average inventory levels will be 12,000 d. The annual number of order placements will be 24, and average inventory levels will be 12,000

a. The annual number of order placements will be 8, and average inventory levels will be 1,500

Which of the following is the most effective and productive way to reduce the optimal order quantity (Q)? a. Reduce total demand b. Reduce order or set-up costs c. Increase the unit price d. Reduce the cost of carrying inventory e. All of the above; i.e., they are equally valid strategies

b. Reduce order or set-up costs

If demand is normally distributed with mean demand = 20 units/week, standard deviation of demand during lead time = 4 units/week, supply lead time is 3 weeks, and the desired CSL is 99%, what is your reorder point? a. 36 b. 48 c. 70 d. 97

c. 70

Which of the following is not a commonly used metric used to evaluate inventory performance? a. Inventory turnover b. Days of supply c. Cash-to-cash cycle time d. Fill rate f. None of the above; i.e., they are all inventory metrics

c. Cash-to-cash cycle time

If your EOQ is 60 and the associated total cost is G(Q)=$4,200. What will be the total cost if you use an order quantity of 40 (rather than the EOQ)? a. Less than $2,800 b. $2,800 c. $4,200 d. More than $4,200

d. More than $4,200

The ______ measures inventory relative to average demand. cycle service level inventory turnover fill rate days of inventory supply

days of inventory supply

Which of the following is a good reason to carry inventory? a. Meet customer demand quickly b. Manage supply/demand uncertainty c. Effectively utilize organizational resources d. Prepare for demand growth e. All of the above f. A & B only

e. All of the above

Which of the following is a source of uncertainty in the reorder point model? a. demand is seldom constant b. product design is unknown c. delivery lead times are not fixed d. customer choice is variable e. both a and c

e. both a and c

Which of the following should your inventory strategy accomplish? -focus on keeping lots of inventory -enable or support your company's competitive strategy -provide for continuity; i.e., not change over time -Avoid running out at all costs

enable or support your company's competitive strategy

Carrying too much inventory or the wrong inventory can lead to which of he following? a. High costs b. Obsolescence—i.e., loss of inventory value c. A loss of flexibility—i.e., capital is used for inventory and isn't available elsewhere d. Effectively utilize organizational resources e. All of the above f. A, B, & C only

f. A, B, & C only

Which of the following helps you improve inventory performance? improving forecasting accuracy storing a SKU in multiple locations at the same time having as large a warehouse as possible managing all of your SKUs in the same way

improving forecasting accuracy

If the average value of inventory is reduced, which of the following will go up? inventory turnover cycle service level cost of goods sold fill rate

inventory turnover

Which of the following is a reason to keep inventory? -to help you respond to uncertain demand -to fill empty warehouses -to keep people busy -to make sure bad parts never slow down operations

to help you respond to uncertain demand

ABC classification is based on which of the following? value of annual item use value of item use relative to total value of items used item value units of annual item use

value of item use relative to total value of items used