Supply Chain Management Test 2

The continuous review inventory system requires less safety stock compared to the periodic review inventory system.

True

The term Cycle Counting is synonymous with physically counting inventory.

True

What inventory factor may be omitted from the basic EOQ derivation because it is a constant?

Annual purchase cost of goods

Your company is conducting forecasting that revolves around the current recession and expansion of the U.S. economy. This type of forecasting can be referred to as what component of a time series?

Cyclical variations

If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.

False

If you were calculating a forecast using an exponential smoothing model, a calculation using α = 0.2 would be putting a greater emphasis on recent data, while a calculation using α = 0.8 would be putting a greater emphasis on past data. Thus a lower α is more responsive to changes in demand in the most recent periods.

False

Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

False

Quantitative forecasting methods are based on opinions and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts.

False

The four broad categories of inventory are raw materials, work-in-process, subassemblies, and finished goods.

False

The goal of a good forecasting technique is to achieve 98.7% accuracy between the forecast and actual demand.

False

Which of the following statements is FALSE:

It is generally not recommended to use a combination of both quantitative and qualitative methods

____, such as lubricants for machines, are used in the production process, but do not become parts of the final products.

Maintenance, repair, and operating supplies

According to textbook, the top three challenges for CPFR implementation include all of the following except:

Supplier lead times

If an item is ordered at its economic order quantity, the annual carrying cost should be:

equal to the annual ordering cost

Companies hold a supply of inventory for all of the following reasons EXCEPT:

increase production change/setup costs

If a tracking signal is positive, which one of the following is true?

Actual value is higher than forecast

Associative forecasting methods are based on opinions and intuition.

False

Dependent Demand must be forecasted based on market conditions.

False

One common Cause-and-Effect Model used is:

Regression analysis

When demand and delivery lead time are known and constant, reorder point is the ____.

demand during lead time