ISDS FINAL QUIZ 5
The main trait of a single-period model is that: A. inventory has limited value after a certain period of time. B. supply is limited. C. the order quantity should usually equal the expected value of demand. D. it has the largest EOQ sizes. E. the cost of a shortage cannot be determined accurately.
A
What is the primary purpose of the basic economic order quantity model shown below? Q* = SqaureRoot( 2 DS/H) A. to minimize the sum of setup cost and holding cost B. to minimize the sum of carrying cost and holding cost C. to maximize the customer service level D. to calculate the reorder point, so that replenishments take place at the proper time E. to calculate the optimum safety stock
A
Which choice below best describes the counterseasonal product demand option? A. developing a mix of products that smoothes out their demands B. producing such products as lawnmowers and sunglasses during the winter C. using subcontractors only when demand is excessive D. the breaking of the aggregate plan into finer levels of detail E. lowering prices when demand is slack
A
Which of these statements about the production order quantity model is FALSE? A. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. B. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. D. Average inventory is less than one-half of the production order quantity. E. None of the above is false.
A
Which choice best describes level scheduling? A. Subcontracting, hiring, and layoffs manipulate supply. B. Overtime is used to handle seasonal demand fluctuations. C. Inventory goes up or down to buffer the difference between demand and production. D. Price points are calculated to match demand to capacity. E. Daily production is variable from period to period.
C
Which of the following statements is true regarding the leverage of supply chain savings? A. Supply chain leverage is about the same for all industries. B. Supply chain leverage depends only upon the percent of sales spent in the supply chain. C. Supply chain savings exert more leverage as the firm's net profit margin decreases. D. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. E. None of the above is true.
C
Which of the following would NOT generally be a motive for a firm to hold inventories? A. to take advantage of quantity discounts B. to hedge against inflation C. to minimize holding costs D. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand E. to decouple various parts of the production process
C
Aggregate planning for service firms that provide intangible output deals mainly with: A. centralized purchasing. B. centralized production. C. smoothing the production rate and finding the optimal size of the workforce. D. planning for human resource requirements and managing demand. E. capital investment decisions.
D
In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity? A. 24 B. 600 C. 100 D. 141 E. 490
D
Revenue management is MOST likely to be used in which one of the following situations? A. a fast food restaurant with wide demand fluctuations during the day B. a firm with a good counterseasonal product mix C. a dental clinic that wants to fill its appointment book D. an airline attempting to fill "perishable" seats at maximum revenue E. a shipping company that can change its fleet size easily
D
Vertical integration appears particularly advantageous when the organization has: A. little experience operating an acquired vendor. B. purchases that are a relatively small percent of sales. C. a very specialized product. D. a large market share. E. a very common, undifferentiated product
D
What directly results from disaggregation of an aggregate plan? A. a transportation matrix B. a capacity-demand matrix C. detailed work schedules D. a master production schedule E. priority scheduling
D
Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A. promotion B. counterseasonal products or services C. advertising D. subcontracting E. price cuts or discounts
D
Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A. promotion B. price cuts or discounts C. advertising D. subcontracting E. counterseasonal products or services
D
Which of the following statements is true regarding the leverage of supply chain savings? A. Supply chain leverage depends only upon the percent of sales spent in the supply chain. B. Supply chain leverage is about the same for all industries. C. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. D. Supply chain savings exert more leverage as the firm's net profit margin decreases. E. None of the above is true.
D
Which of the following statements is true regarding the leverage of supply chain savings? A. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. B. Supply chain leverage depends only upon the percent of sales spent in the supply chain. C. Supply chain leverage is about the same for all industries. D. Supply chain savings exert more leverage as the firm's net profit margin decreases. E. None of the above is true.
D
Which of these statements about the production order quantity model is FALSE? A. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B. Average inventory is less than one-half of the production order quantity. C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. D. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E. None of the above is false.
D
In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity? A. 141 B. 24 C. 490 D. 100 E. 600
A
A disadvantage of the fixed-period inventory system is that: A. orders usually are for larger quantities. B. it involves higher ordering costs than the fixed quantity inventory system. C. the average inventory level is decreased. D. additional inventory records are required. E. since there is no count of inventory during the review period, a stockout is possible.
E
A disadvantage of the fixed-period inventory system is that: A. the average inventory level is decreased. B. orders usually are for larger quantities. C. it involves higher ordering costs than the fixed quantity inventory system. D. additional inventory records are required. E. since there is no count of inventory during the review period, a stockout is possible.
E
A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A. keiretsu B. horizontal integration C. backward integration D. current transformation E. forward integration
E
All EXCEPT which of the following statements about ABC analysis are true? A. ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume. B. ABC analysis suggests that there are the critical few and the trivial many inventory items. C. ABC analysis is an application of the Pareto principle. D. In ABC analysis, inventory may be categorized by measures other than dollar volume. E. ABC analysis suggests that all items require the same high degree of control.
E
In level scheduling, what is kept uniform from month to month? A. demand levels B. sub-contracting levels C. product mix D. inventory levels E. production/workforce levels
E
The bullwhip effect: A. increases the costs associated with inventory in the supply chain. B. occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. C. occurs because of distortions in information in the supply chain. D. results in increasing fluctuations at each step of the sequence. E. All of the above are true.
E
The bullwhip effect: A. increases the costs associated with inventory in the supply chain. B. results in increasing fluctuations at each step of the sequence. C. occurs because of distortions in information in the supply chain. D. occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. E. All of the above are true.
E
The proper quantity of safety stock is typically determined by: A. multiplying the EOQ by the desired service level. B. minimizing total costs. C. carrying sufficient safety stock so as to eliminate all stockouts. D. using a single-period model. E. setting the level of safety stock so that a given stockout risk is not exceeded.
E
Which of the following is an element of inventory holding costs? A. investment costs B. material handling costs C. housing costs D. pilferage, scrap, and obsolescence E. All of the above are elements of inventory holding costs.
E
Which of the following is an element of inventory holding costs? A. material handling costs B. housing costs C. investment costs D. pilferage, scrap, and obsolescence E. All of the above are elements of inventory holding costs.
E
Which of the following statements about ABC analysis is FALSE? A. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B. In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. C. Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis. D. In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have. E. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
E
Which of the following statements about aggregate planning is TRUE? A. An advantage of the counterseasonal product and service mixing option is that it matches seasonal fluctuations without hiring/training costs. B. In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand. C. The option of varying workforce size by hiring or layoffs is used where the size of the labor pool is small. D. A disadvantage of subcontracting is that it may require skills or equipment outside the firm's areas of expertise. E. A pure chase strategy allows lower inventories when compared to a pure level scheduling.
E
Which of the following statements about the basic EOQ model is TRUE? A. If annual demand were to double, the EOQ would increase. B. If the ordering cost were to double, the EOQ would rise. C. If the carrying cost were to increase, the EOQ would fall. D. If annual demand were to double, the number of orders per year would increase. E. All of the above statements are true.
E
The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.
False
A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.
True
Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.
True
Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
True
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A. about 38 B. more than 40 C. about 32 D. about 24 E. about 18
B
Local optimization is a supply-chain complication best described as: A. the opposite of the bullwhip effect. B. optimizing one's local area without full knowledge of supply chain needs. C. the prerequisite of global optimization. D. the result of supply chains built on suppliers with compatible corporate cultures. E. obtaining very high production efficiency in a decentralized supply chain.
B
Vertical integration appears particularly advantageous when the organization has: A. a very specialized product. B. a large market share. C. a very common, undifferentiated product. D. little experience operating an acquired vendor. E. purchases that are a relatively small percent of sales.
B
Which choice best describes level scheduling? A. Daily production is variable from period to period. B. Inventory goes up or down to buffer the difference between demand and production. C. Overtime is used to handle seasonal demand fluctuations. D. Price points are calculated to match demand to capacity. E. Subcontracting, hiring, and layoffs manipulate supply.
B
Which of the following aggregate planning options attempts to manipulate product or service demand? A. overtime/idle time B. price cuts C. inventories D. subcontracting E. part-time workers
B
Which of the following is NOT an advantage of level scheduling? A. more employee commitment B. matching production exactly with sales C. lower turnover D. stable employment E. lower absenteeism
B
Which of these is among the demand options of aggregate planning? A. changing inventory levels B. back-ordering during high-demand periods C. varying production rates through overtime or idle time D. subcontracting E. varying workforce size
B
Which of these is among the demand options of aggregate planning? A. varying production rates through overtime or idle time B. back-ordering during high-demand periods C. subcontracting D. changing inventory levels E. varying workforce size
B
The proper quantity of safety stock is typically determined by: A. multiplying the EOQ by the desired service level. B. minimizing total costs. C. setting the level of safety stock so that a given stockout risk is not exceeded. D. using a single-period model. E. carrying sufficient safety stock so as to eliminate all stockouts.
C
A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem? A. 490 B. 300 C. 245 D. 306 E. 61
C
Hewlett-Packard delays customization of its laser printers as long as possible. This is an example of which of the following? A. backward integration B. standardization C. postponement D. timely customization E. vendor-managed inventory
C
Hewlett-Packard delays customization of its laser printers as long as possible. This is an example of which of the following? A. backward integration B. vendor-managed inventory C. postponement D. standardization E. timely customization
C
Hewlett-Packard delays customization of its laser printers as long as possible. This is an example of which of the following? A. standardization B. backward integration C. postponement D. vendor-managed inventory E. timely customization
C
In the service sector, which of the following aggregate planning strategies might direct your client to a competitor? A. varying work force size by hiring or layoffs B. using part-time workers C. subcontracting D. varying production rates through overtime or idle time E. changing inventory level
C
