ISDS Final 12/2023
A firm wants to develop a level material use schedule based on the following data. What should be the setup cost? (table) a) $0.45 b) $4.50 c) $45
$0.45
A food truck owner loses his generator and resorts to making burritos in his kitchen in the morning and driving out to the location where he sells them. He can't make any burritos when he leaves his house, so each day he must rely on the amount he makes in the morning. His burritos have $1 worth of meat, cheese, beans, and picante sauce. He sells them for $6 during the lunch rush and sells two for fifty cents when he returns home at the end of the day. What is his service level? a) 0.87 b) 0.91 c) 0.83
0.87
The average inventory of houses in the Edmond real estate market is $18,750,000 and the annual sales in the market are $136,459,000. What is the average number of weeks of supply of houses on the market in this city? a) 0.19 b) 72 c) 10
10
Lead time for computers is 5 days with a daily demand of 25 and safety stock of 5 computers. If management wants to use 10 kanbans how many computers should each one hold? a) 13 b) 10 c) 5
13
An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true? a) 100 is the reorder point, and 14 is the order quantity b) 14 is the safety stock, and 100 is the reorder point c) 14 is the reorder point, and 100 is the order quantity
14 is the reorder point, and 100 is the order quantity
Every day has an average demand of 20 units and a standard deviation of demand of 5 units. The lead time is 14 days. What is the standard deviation of demand for the lead time period? a) 8.37 b) 18.71 c) 70
18.71
A company wishes to determine the economic order quantity (EOQ) for an item that has an annual demand of 2,000 units, a cost per order of $75, and annual carrying cost of 7.50 per unit. What is the EOQ? a) 40,000 b) 100 c) 200
200
Lead time for cakes is 2 days with daily demand of 10 cakes and safety stock of ½ a day. Each container (kanban) holds one cake. What is the correct number of kanbans? a) 25 b) 10 c) 1
25
Consider a firm with a 2018 net income of $20 million, revenue of $60 million, and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant, and equipment, how many weeks of supply does the firm hold? a) 5.20 weeks b) 2.60 weeks c) 4.16 weeks
4.16 weeks
A production facility is trying to determine the best batch size for an item that is produced intermittently. This item has an annual demand of 1,000 units, an annual carrying cost of $10 per unit, and a setup cost of $400. They operate 50 weeks per year, and can produce 40 units per week. What is the best batch size for this item? a) 400 b) 283 c) 800
400
A specific product has expected demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level? a) 55 b) 41 c) 75
41
Lead time for computers is 7 days with daily demand of 5 computers and a safety stock of 1 day. Each kanban holds 8 computers. What is the correct number of kanbans? a) 5 b) 7 c) 8
5
A store wants to ensure a shelf full of marshmallow peeps as the holiday season approaches. Daily demand for peeps is normally distributed with a mean of 25 and a standard deviation of 5. Lead time is 3 days and the store intends a 98% service level. What is the appropriate reorder point? a) 75 b) 93 c) 87
93
Which of the following best describes a gross material requirements plan? a) A schedule that shows total demand for an item, when it must be ordered from a supplier, or when production must start. b) A schedule showing which products are to be manufactured and in what quantities. c) An intermediate-range plan for the scheduling of families of products.
A schedule that shows total demand for an item, when it must be ordered from a supplier, or when production must start.
Capacity planning in closed-loop MRP does not do which of the following? a) Smooth work center loads b) Utilize feedback about workload c) Adds in additional capacity
Adds in additional capacity
Which one of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas? a) Airfreight b) Waterways c) Trucking
Airfreight
Which of these is an example of pull production? a) The ice cream truck drives through the neighborhood and the driver stops occasionally, selling frozen delights to happy children. b) Boeing has a customer specify the features on the plane they wish to order and initiates orders with their suppliers to fabricate those parts. c) The professor receives her teaching schedule for the semester and dusts off her notes for yet another semester of transformative learning.
Boeing has a customer specify the features on the plane they wish to order and initiates orders with their suppliers to fabricate those parts.
__ is the technique where a manufacturer sends individual components (rather than assembled units) to a distributor. a) Channel assembly b) Multistage control of replenishment c) The bullwhip effect
Channel assembly
What type of negotiation strategy requires the supplier to open its books to the purchasers? a) Competitive bidding b) Cost-based price model c) Market-based price model
Cost-based price model
Which of these relationships is an example of dependent demand? a) Determining the number of napkins needed based on the temperature outside. b) Determining the amount of cat food needed by the number of hairballs found on the carpet. c) Determining the number of slices of pepperoni based on the number of pizzas ordered.
Determining the number of slices of pepperoni based on the number of pizzas ordered.
Which of the following is not a reason for variability? a) Customer demand is unknown b) Employees, machines, and suppliers follow production standards c) Engineering drawings are incomplete
Employees, machines, and suppliers follow production standards
Which one of the following is not a layout tactic in a Lean environment? a) Fixed equipment b) Work cells for families of products c) Minimizing distance
Fixed equipment
If a casual-dining restaurant is attempting to practice JIT and lean operations, which of the following would not be present? a) Close relationship with the restaurant's suppliers of food, utensils, and equipment b) A kitchen set up to minimize unnecessary movement c) Food preparation in large batches
Food preparation in large batches
Professor Willis takes his introductory operations management class on a tour of a local factory that uses a lean approach. They don their ear plugs and safety glasses before heading out on the plant floor to see production up close. This part of the tour could be described as a a) Kaizen event b) Gemba walk c) Kanban tour
Gemba walk
Which one of the following is a concern expressed by suppliers who are in partnership with JIT organizations? a) Having limited ability to respond to changes in product and quality b) Large lot sizes c) Having too many customers
Having limited ability to respond to changes in product and quality
If the goals of JIT partnerships are met, which of the following is a result? a) In-transit inventory falls as suppliers are located closer to facilities b) For incoming goods, receiving activities are outsourced c) In-plant inventory replaces in-transit inventory
In-transit inventory falls as suppliers are located closer to facilities
Which of the following is false concerning enterprise resource planning? a) It is inexpensive to implement. b) It shares common data and practices across the enterprise. c) It provides and accesses information in a real-time environment.
It is inexpensive to implement.
Which one of the following is an example of Lean being used for competitive advantage? a) Jones Company has decreased the number of job classifications to just a few b) Lafourche Metals increases the number of suppliers to be less dependent on just a few c) Houma Fabricators is proud to announce that incoming goods are inspected
Jones Company has decreased the number of job classifications to just a few
Which of the following is specifically characterized by continuous and forced problem solving through a focus on throughput and reduced inventory? a) Lean Operations b) Toyota Production System c) Just-in-Time
Just-in-Time
Focus on continuous improvement is described by a) Kaizen event b) Kanban c) Kaizen
Kaizen
Which one of the following performance measures is not true of a world class firm? a) Short time placing an order b) Long lead time c) High percentage of on-time deliveries
Long lead time
Which of the following supply chain strategies creates value by allowing suppliers to have economies of scale? a) Long-term partnering with a few suppliers b) Vertical integration c) Negotiating with many suppliers
Long-term partnering with a few suppliers
What lot-sizing technique is generally preferred when inventory holding costs are extremely high? a) Economic order quantity b) Lot-for-lot c) Part period balancing
Lot-for-lot
Which of the following is not a concern of the supply chain? a) Warehousing and inventory levels b) Maintenance scheduling c) Credit and cash transfers
Maintenance scheduling
Which of the following is an aspect of environmental risk in supply chain management? a) Secure financial transactions b) Raw material availability c) Political issues
Political issues
Which of the following is generally found in most JIT environments? a) Push systems b) A push or pull system, depending upon the rate of demand c) Pull systems
Pull systems
Which of the following is not an attribute of lean operations? a) Eliminating almost all inventory through utilization of JIT b) Pushing responsibility to the highest level through centralized decision making c) Educating suppliers to accept responsibility for helping meet customer needs
Pushing responsibility to the highest level through centralized decision making
Fixed quantity models require perpetual inventory systems. By what name are these models known? a) P system b) Q system c) ROP system
Q system
Which of the following is not a key benefit of MRP? a) Improved response to customers b) Quality increases c) Faster response to market changes
Quality increases
With the growth of the JIT, which of the following distribution systems has been the biggest loser? a) Airfreight b) Trucking c) Railroads
Railroads
Which of the following is not a goal of Lean Partnerships? a) Removal of engineering changes b) Removal of in-plant inventory c) Removal of receiving activities
Removal of engineering changes
Which one of the following is a characteristic of a Lean supplier partnership? a) Active pursuit of vertical integration b) Removal of incoming inspection c) Maximal product specifications imposed on supplier
Removal of incoming inspection
Which of the following should be higher in P systems than Q systems? a) Demand b) Order size c) Safety stock
Safety stock
Generally, inventory types are divided into four main categories. Which of the following is not one of the four main categories of inventory? a) Safety stock inventory b) Raw material inventory c) Work-in-process inventory
Safety stock inventory
Which of the following statements regarding MRP in services is true? a) Services such as restaurant meals illustrate dependent demand, and require product-structure trees, bills-of-material, and scheduling. b) MRP does not work well in services because there is little (or no) dependent demand. c) MRP can be used in services, but only for those that offer little customization.
Services such as restaurant meals illustrate dependent demand, and require product-structure trees, bills-of-material, and scheduling.
Which of the following is not an advantage of the "few suppliers" concept? a) Suppliers' willingness to provide technological expertise b) Suppliers' willingness to participate in JIT systems c) Sharing trade secrets between firms
Sharing trade secrets between firms
Which one of the following is not a supply chain strategy? a) Short-term relationship with few suppliers b) Negotiation with many suppliers c) Vertical integration
Short-term relationship with few suppliers
Which of the following is not characteristic of a Toyota Production System (TPS) employee? a) Strict job classifications b) Knowledgeable c) Empowered
Strict job classifications
Which of the following statements is true about the kanban system? a) The supplier workstation signals the customer workstation as soon as a batch is completed. b) It is useful to smooth operations when numerous large and small lot sizes exist. c) The customer workstation signals to the supplier workstation when production is needed.
The customer workstation signals to the supplier workstation when production is needed.
Which of these conditions is not necessary for the economic order quantity model to be valid? a) The item has a constant lead time. b) The item has a constant order cost. c) The item has a constant purchase price.
The item has a constant purchase price.
What term is used to describe the outsourcing of logistics? a) Third-Party Logistics b) Shipper Managed Inventory c) Outside Logistics
Third-Party Logistics
What is the rate required to push orders through the production process? a) Throughput time b) Push time c) Manufacturing cycle time
Throughput time
Which of the following best describes vertical integration? a) To develop the ability to produce products which complement the original product b) To produce goods or services previously purchased c) To build long-term partnerships with a few suppliers
To produce goods or services previously purchased
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? a) Just-in-Time b) Toyota Production System c) Lean Operations
Toyota Production System
A disadvantage of the fixed-period inventory system is that a) it involves higher ordering costs than fixed-quantity inventory systems. b) a stockout is possible. c) additional inventory records are required.
a stockout is possible.
If demand is not uniform and constant, the stockout risks can be controlled by a) increasing the EOQ b) adding safety stock c) placing an extra order
adding safety stock
ABC analysis generally divides on-hand inventory into three classes based upon a) annual dollar volume b) unit price c) item quality
annual dollar volume
Enterprise Resource Planning a) does not integrate well with other functional areas beyond operations b) automates and integrates the majority of business processes c) seldom requires additional software
automates and integrates the majority of business processes
Material requirements planning (MRP) does not consider a) service organizations b) time buckets c) capacity
capacity
The appropriate level of safety stock is typically determined by a) taking the square root of the economic order quantity b) carrying sufficient safety stock so as to eliminate all stockouts c) choosing the level of safety stock that assures a given service level
choosing the level of safety stock that assures a given service level
A supply chain that is designed to make both the usual forward flows and the reverse logistics flow as efficient as possible is a(n) a) dual-flow supply chain b) closed-loop supply chain c) hyperloop supply chain
closed-loop supply chain
The three classic types of negotiation strategies are a) cost-based price model, market-based price model, and competitive bidding b) many suppliers, few suppliers, and vendor selection c) distributive bargaining, arbitrative bargaining, and mediated bargaining
cost-based price model, market-based price model, and competitive bidding
Dependent demand techniques used throughout the supply chain are called a) enterprise resource planning b) distribution resource planning c) material requirements planning II
distribution resource planning
A furniture maker has delivered a dining set to the end consumer rather than to the furniture store. The furniture maker is practicing a) postponement b) drop shipping c) channel assembly
drop shipping
A system that triggers ordering on a uniform time basis is called a a) fixed-period system b) reorder point system c) fixed-quantity system
fixed-period system
The list of the 5Ss supports lean production by a) reducing inventory, in the "standardize" item b) increasing variability through standardization, in the "standardize" item c) identifying non-value items and removing them, in the "sort/segregate" item
identifying non-value items and removing them, in the "sort/segregate" item
The trucking industry is establishing technologies, which let shippers and truckers find each other in order to a) improve logistics efficiency b) regulate pricing c) find the most efficient routes
improve logistics efficiency
In the probabilistic model, increasing the service level will a) have an indeterminate impact on the cost of the inventory policy b) have no impact on the cost of the inventory policy c) increase the cost of the inventory policy
increase the cost of the inventory policy
Inventory record accuracy would be decreased by a) increasing stockroom accessibility b) using ABC analysis c) increasing reorder points
increasing stockroom accessibility
Last year, a vendor cost of goods sold was $8,000 and average inventory investment was $500. This vendor's ___ was 16 a) fill rate b) inventory turnover c) weeks of supply
inventory turnover
Cycle counting a) is a process by which inventory records are verified for accuracy b) provides a measure of inventory turnover c) assumes that the most frequently used item must be counted more frequently
is a process by which inventory records are verified for accuracy
The production order quantity model a) results in larger average inventory than an equivalent EOQ model b) is appropriate when units are produced and sold simultaneously c) assumes instantaneous delivery
is appropriate when units are produced and sold simultaneously
Lean makes quality less expensive because a) it hides quality improvement costs in inventory b) it uses larger batch production c) it prevents long runs of defects
it prevents long runs of defects
Maximizing local profit or minimizing cost in a supply chain is best described as a) local optimization b) incentives c) the bullwhip effect
local optimization
The approach that holds the suppliers responsible for maintaining the necessary technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is a) few suppliers b) many suppliers c) Keiretsu
many suppliers
The __________ is the MRP input detailing which end items are to be produced, when they are needed, and in what quantities. a) master production schedule b) purchase order c) bill of material
master production schedule
Inventory management policies based on ABC analysis might include investing a) the most time verifying the accuracy of records for B items b) more in supplier development for A items c) extra care in forecasting for C items
more in supplier development for A items
How many databases are in a typical corporate ERP system? a) five to ten b) one c) more than ten
one
The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is a) outsourcing b) a make-or-buy decision c) Keiretsu
outsourcing
A system that keeps track of each withdrawal or addition to inventory continuously is a) fixed-period inventory system b) perpetual inventory system c) fixed-quantity system
perpetual inventory system
The SCOR model addresses these functions in a supply chain: a) supply, create, operate, return, and enable b) plan, source, make, deliver, return, and enable c) source, complement, order, return, and enable
plan, source, make, deliver, return, and enable
Keeping a product generic as long as possible before customizing is known as a) forward integration b) backward integration c) postponement
postponement
The technique known as level schedules: a) is based on meeting one week's demand. b) processes many small batches rather than one large batch. c) allows for variance in scheduling between batches.
processes many small batches rather than one large batch.
In which of these services does virtually every successful company work on a JIT basis? a) plumbing b) hospital c) restaurant
restaurant
Extra units that are held in inventory to reduce stockouts are called a) reorder point b) just-in-time inventory c) safety stock
safety stock
The four stages of supplier selection, in order, are a) supplier evaluation, negotiations, supplier certification, and supplier development b) supplier development, supplier evaluation, central purchasing, and negotiations c) supplier evaluation, supplier development, negotiations, and contracting
supplier evaluation, supplier development, negotiations, and contracting
Characteristics of JIT partnerships with respect to suppliers include: a) supporting suppliers so they become or remain price competitive. b) frequent competitive bidding. c) pursuit of vertical integration to reduce number of suppliers.
supporting suppliers so they become or remain price competitive.
A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributer, the distributer assumes the large size is a trend, not a one-time event. The distributer, therefore, places an even larger order with the supplier of the lobster. This is the result of a) vendor-managed inventory b) a pass-through facility c) the bullwhip effect
the bullwhip effect
Inventory turnover is calculated as the average inventory investment divided into a) annual sales b) net revenue c) the cost of goods sold
the cost of goods sold
One difference between a fixed-quantity and a fixed-period system is that a) the lead times are unknown in the fixed -period system. b) items are dependent on each other in the fixed-period system. c) the cycle minimum inventory amount varies in the fixed-period system.
the cycle minimum inventory amount varies in the fixed-period system.
A disadvantage of the "few suppliers" strategy is a) the possible violation of the Sherman Antitrust Act b) the high cost of changing partners c) the lack of cost savings for customers and suppliers
the high cost of changing partners
As the safety stock is lowered: a) the number of kanbans falls. b) the demand during lead time falls. c) the size of the container falls.
the number of kanbans falls.
The difference between the basic Economic Order Quantity (EOQ) model and the production order quantity model is that a) the economic order quantity model does not require the assumption of known, constant lead time b) the production order quantity model does not require the assumption of a known, constant demand c) the production order quantity model does not require the assumption of instantaneous delivery
the production order quantity model does not require the assumption of instantaneous delivery
The number of kanbans should be equal to: a) ½ of the EOQ b) the ratio of (demand during lead time + safety stock) to container size c) demand during lead time
the ratio of (demand during lead time + safety stock) to container size
The primary purpose of the basic economic order quantity model is a) to calculate the optimum reorder point b) to maximize the customer service level c) to minimize the sum of setup cost and holding cost
to minimize the sum of setup cost and holding cost
One use of inventory is a) to tightly link production and distribution processes b) to ensure that item cost is maximized c) to provide a hedge against inflation
to provide a hedge against inflation
Most inventory models attempt to minimize a) total inventory costs b) the number of items ordered c) the likelihood of a stockout
total inventory costs
The three major variations of online catalogs are grouped by a) cost-based, market-based, and competitive bidding systems b) vendors, intermediaries, and buyer exchange systems c) EDI, ERP, and ASN systems
vendors, intermediaries, and buyer exchange systems
The two most important inventory-based questions answered by the typical inventory model are a) when to place an order and how many of an item to order b) how many of an item to order and what is the cost of this order c) how many of an item to order and with whom the order should be placed
when to place an order and how many of an item to order
In late July the production manager knew she could not alter the schedule for August. She could, however, make changes to the schedule for September and beyond. The August schedule could be described as being: a) in a time buckets. b) pegged. c) within a time fence.
within a time fence.
