ISDS Exam 3 (Chapters 11-14 & 16) Multiple Choice

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost _____ per year in total annual inventory costs. a. $400 b. $800 c. $1200 d. zero; this is a class C item e. cannot be determined because unit price is not known

b. $800

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order a. all 4000 units at one time b. 200 units per order c. every 20 days d. 10 times per year e. none of the above

b. 200 units per order

What is the average capacity utilization in the motor carrier (trucking) industry? a. 25% b. 50% c. 75% d. 95% e. 99%

b. 50%

An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be orders." Which of the following statements is true? a. One hundred is the reorder point, and 14 is the order quantity. b. Fourteen is the reorder point, and 100 is the order quantity. c. The number 100 is a function of demand during lead time. d. Fourteen is the safety stock, and 100 is the reorder point. e. None of the above is true

b. Fourteen is the reorder point, and 100 is the order quantity

Which of the following statements regarding the production order quantity model is true? a. It applies only to item produced in the firm's own production departments. b. It relaxes the assumption that all the order quantity is received at one time. c. It relaxes the assumption that the demand rate is constant. d. It minimizes the total production costs. e. It minimizes inventory.

b. It relaxes the assumption that all the order quantity is received at one time.

Consider a firm with a 2007 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 & equipment, what is the inventory turnover? a. 12.50 b. 10.00 c. 42.00 d. 4.16 e. 20.00

a. 12.50

A specific product has demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock (approximately) provides a 95% service level? a. 41 b. 55 c. 133 d. 140 e. 165

a. 41

The fixed-period inventory model requires more safety stock than the fixed-quantity models because a. a stockout can occur during the review period as well as during the lead time b. this model is used for products that heave large standard deviations of demand c. this model is used for products that require very high service levels d. replenishment is not instantaneous e. setup costs and holding costs are large

a. a stockout can occur during the review period as well as during the lead time

The three major variations of online catalogs are a. catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers b. EDI, ERP, and ASN c. cost-based, market-based, and competitive bidding d. drop shipping, channel assembly, and postponement e. all auction-based

a. catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers

What type of negotiating strategy requires the supplier to open its books to the purchasers? a. cost-based price model b. market-based price model c. competitive bidding d. price-based model e. none of the above

a. cost-based price model

In the basic EOQ model, if the cost of placing an order double, and all other values remain constant, the EOQ will a. increase by about 41% b. increase by 100% c. increase by 200% d. increase, but more date is needed to say by how much e. either increase or decrease

a. increase by about 41%

Local optimization is a supply chain complication best described as a. optimizing one's local area without full knowledge of organizational needs b. obtaining very high production efficiency in a decentralized supply chain c. the prerequisite of global optimization d. the result of supply chains built on suppliers with compatible corporate cultures e. all of the above

a. optimizing one's local area without full knowledge of organizational needs

Keeping a product generic as long as possible before customizing is known as a. postponement b. keiretsu c. channel assembly d. forward integration e. backward integration

a. postponement

By which distribution system is 90 percent of the nation's coal shipped? a. railroads b. trucks c. waterways d. pipelines e. none of the above

a. railroads

The three stages of vendor selection, in order, are a. vendor evaluation, vendor development, and negotiations b. vendor development, vendor evaluation, and vendor acquisition c. introduction, growth, and maturity d. vendor evaluation, negotiations, and vendor development e. EDI, ERP, and ASN

a. vendor evaluation, vendor development, and negotiations

Which of the following statements regarding Amazon.com is false? a. The company was opened by Jeff Bezos in 1995. b. The company was founded as, and is, a "virtual retailer" with no inventory. c. The company is not a world-class leader in warehouse management and automation d. The company uses both United Parcel Service and the U.S Postal Service as shippers. e. Amazon obtains its competitive advantage through inventory management.

b. The company was founded as, and still is a "virtual retailer" with no inventory

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. a large market share

A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing a. postponement b. drop shipping c. channel assembly d. passing the buck e. float reduction

b. drop shipping

A rice mill in south Louisiana purchases the trucking form that transports packaged rice to distributors. This is an example of a. horizontal integration b. forward integration c. backward integration d. current transformation e. keiretsu

b. forward integration

A product whose EOQ is 400 experiences a 50% increase in demand. The new EOQ is a. unchanged b. increased by less than 50% c. increased by 50% d. increased by more than 50% e. cannot be determined

b. increased by less than 50%

E-procurement a. works best in long-term contract situation, and is not suited for auctions b. is the same thing as Internet purchasing c. represents only the auction and bidding components of Internet purchasing d. is illegal in all states except Nevada and New Jersey e. All of the above are true of e-procurement

b. is the same thing as Internet puchasing

Japanese manufactures often take a middle ground between purchasing from few suppliers and vertical integration. This approach is a. kanban b. keiretsu c. samurai d. poka-yoke e. kaizen

b. keiretsu

In the make-or-buy decision, which of the following is a reason for making an item? a. management can focus on its primary business b. lower production cost c. inadequate capacity d. reduce inventory costs e. None of the above is a reason for making an item

b. lower production cost

The purchasing approach that hold 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 d. vertical integration e. virtual companies

b. many suppliers

Visibility throughout the supply chain is a requirement among supply chain members for a. mutual agreement on goals b. mutual trust c. compatible organizational cultures d. local optimization e. the bullwhip effect

b. mutual trust

A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is a. three times as large b. one-third as large c. nine times as large d. one-ninth as large e. cannot be detemined

b. one-third as large

Cycle counting a. is a process by which inventory record are verified once a year b. provides a measure of inventory accuracy c. provides a measure of inventory turnover d. assumes that all inventory record must be verified with the same frequency e. assumes that the most frequently used items must be counted more frequently

b. provides a measure of inventory accuracy

With the growth of JIT, which of the following distribution systems has been the biggest loser? a. trucking b. railroads c. airfreight d. waterways e. pipelines

b. railroads

ABC analysis is based upon the principle that a. all items in inventory must be monitored very closely b. there are usually a few critical items, and many items which are less critical c. an item is critical if its usage is high d. more time should be spent on class "C" items because there are more of them e. an item is critical if its unit price is high

b. there are usually a few critical items, and many items which are less critical

In the make-or-buy decision, which of the following is not a reason for buying? a. inadequate capacity b. to obtain desired quality c. patents or trade secrets d. lower inventory costs e. All of the above are reasons for buying

b. to obtain desired quality

Which of the following is not an advantage of a virtual company? a. speed b. total control over every aspect of the organization c. specialized management expertise d. low capital investment e. flexibility

b. total control over every aspect of the organization

One dollar saved in purchasing is a. equivalent to a dollar earned in sales revenue b. worth even more than a dollar earned in sales revenue c. worth slightly more than a dollar earned because of taxes d. worth form 35% in the technical instrument industry to 70% in the food products industry e. only worthwhile if you are in the 50% tax bracket and still have a low profit margin

b. worth even more than a dollar earned in sales revenue

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model was 200 units and the total annual inventory (carrying and setup) cost was $600. The inventory carrying cost per unit per year for this item is a. $1.50 b. $2.00 c. $3.00 d. $150.00 e. not enough data to determine

c. $3.00

A certain type of computer cost $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is approximate economic order quantity? a. 16 b. 70 c. 110 d. 183 e. 600

c. 110

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, 90 percent service level will require safety stock of approximately a. 7 units b. 10 units c. 13 units d. 16 units e. 26 units

c. 13 units

In the basic EOQ model, if D = 6000 per year, S = $100, H = $5 per unit per month, the economic order quantity id approximately a. 24 b. 100 c. 141 d. 490 e. 600

c. 141

If a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. The standard deviation of demand during lead time is approximately a. 15 units b. 100 units c. 154 units d. 500 units e. 13,125 units

c. 154 units

A product order quantity problem has daily demand rate = 10 and daily production rate = 50. The production order quantity for this problem is approximately 612 units. The average inventory for this problem is approximately a. 61 b. 245 c. 300 d. 306 e. 548

c. 184

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holing cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately a. 139 b. 174 c. 184 d. 365 e. 548

c. 184

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires a safety stock of approximately a. 28 units b. 30 units c. 49 units d. 59 units e. 114 units

c. 49 units

Which of the following statements regarding control of service inventories is true? a. Service inventory is a fictional concept, because services are intangible. b. Service inventory needs no safety stock, because there's no such thing as a service stockout. c. Effective control of all goods leaving the facility is one applicable technique. d. Service inventory has carrying costs but not setup costs. e. All of the above are true

c. Effective control of all goods leaving the facility is one applicable technique.

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 savings exert more leverage as the firm's purchases are a smaller percent of sales c. Supply chain savings exert more leverage as the firm has a lower net profit margin d. Supply chain leverage depends only upon the percent of sales spent in the supply chain e. None of the above is true

c. Supply chain savings exert more leverage as the firm has a lower net profit margin

Most inventory models attempt to minimize a. the likelihood of a stockout b. the number of items ordered c. total inventory based costs d. the number of orders placed e. the safety stock

c. total inventory based costs

Which distribution system is the fastest growing mode of shipping? a. railroads b. trucks c. airfreight d. waterways e. pipelines

c. airfreight

Which one of the following distribution systems offers quickness and reliability when emergency suppliers are needed overseas? a. trucking b. railroads c. airfreight d. waterways e. pipelines

c. airfreight

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed a. horizontal integration b. forward integration c. backward integration d. current transformation e. job expansion

c. backward integration

If the actual order quantity is the economic order quantity in a problem that meets the assumption of the economic order quantity model, the average amount of inventory on hand a. is smaller the smaller is the holding cost per unit b. is zero c. is one-half of the economic order quantity d. is affected by the amount of product cost e. All of the above are true

c. is one-half of the economic order quantity

The Japanese concept of a company coalition of suppliers is a. poka-yoke b. kaizen c. keiretsu d. dim sum e. illegal

c. keiretsu

Which of the following performance measures is not true of a world class firm? a. short time placing an order b. high percentage of accepted material c. large lead time d. high percentage of on-time deliveries e. low number of shortages per year

c. large lead time

Which of the following supply chain strategies creates value by allowing suppliers to have economies of scale? a. suppliers becoming part of a company coalition b. vertical integration c. long-term partnering with a few suppliers d. negotiating with many suppliers e. developing virtual companies

c. long-term partnering with a few suppliers

Drop shipment a. is equivalent to cross-docking b. is the opposite of a blanket order c. means the supplier will ship directly to the end consumer, rather than to the seller d. is the same thing as keiretsu e. is a good reason to find a new firm to ship your products

c. means the supplier will ship directly to the end consumer, rather tan to the seller

The Institute for Supply Management a. establishes laws and regulations for supply management b. is an agency of the United Nationals charge with promoting ethical conduct globally c. published the principles and standards for ethical supply management conduct d. prohibits backward integration into developing economies e. All of the above are true

c. publishes the principles and standards for ethical supply management conduct

The two most basic inventory questions answered by the typical inventory model are a. timing and cost of orders b. quantity and cost of orders c. timing and quantity of orders d. order quantity or orders e. ordering cost and carrying cost

c. timing and quantity of orders

Which of the following best describes vertical integration? a. to sell products to a supplier or a distributor b. to develop the ability to product products which complement the original product c. to produce goods or services previously purchased d. to develop the ability to produce the specified good more efficiently than before e. to build long-term partnerships with a few suppliers

c. to produce goods or services previously purchased

Which of the following is not an advantage of the "few suppliers" concept? a. suppliers' willingness to participate in JIT systems b. trust c. vulnerability of trade secrets d. creation of value by allowing suppliers to have economies of scale e. suppliers' willingness to provide technological expertise

c. vulnerability of trade secrets

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, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers c. in ABC analysis, "C" Items have minimal record, periodic review, and simple controls d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings e. All of the above

d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings

Outsourcing a. transfers traditional internal activities to outside vendors b. utilizes the efficiency which comes with specialization c. lets the outsourcing firm focus on its critical success factors d. All of the above are true of outsourcing e. None of the above are true of outsourcing

d. All of the above are true of outsourcing

Which of the following statements about the basic EOQ model is false? a. If the setup cost were to decrease, the EOQ would fall. b. If annual demand were to increase, the EOQ would increase. c. If the ordering cost were to increase, the EOQ would rise. d. If annual demand were to double, the EOQ would also double. e. All of the above statements are true.

d. If annual demand were to double, the EOQ would also double.

Which of these statements about the production order quantity model is false? a. The production order quantity model is appropriate when the assumption of the basic EOQ model are met, except that receipt is noninstantaneous. b. Because receipt is noninstantaneous, some units are used immediately, not stored in inventory. c. Average inventory is less than one-half of the production order quantity. d. All else equal, the smaller the ration of demand rate to production rate, the larger is the production order quantity. e. None o the above is false.

d. None of the above is false.

Which of the following is not an assumption of the economic order quantity model? a. Demand is known, constant, and independent b. Lead time is known and constant c. Quantity discounts are not possible d. Production and use can occur simultaneously e. The only variable costs are setup cost and holding (or carrying) cost

d. Production and use can occur simultaneously

Which one of the following statements about purchasing is true? a. The cost of purchases as a percent of sales is often small b. Purchasing provides a major opportunity for price increases c. Purchasing is always more efficient than making an item d. Purchasing has an impact on the quality of the goods and services sold e. Competitive bidding is a major factor in long-term cost reductions

d. Purchasing has an impact on the quality of the goods and services sold

Which of the following statements about quantity discounts is false? a. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. b. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. c. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. d. The larger annual demand, the less attractive a discount schedule will be. e. The smaller the ordering cost, the less attractive a discount schedule will be.

d. The larger annual demand, the less attractive a discount schedule will be.

If demand is not uniform and constant, then stockout risks can be controlled by a. increasing the EOQ b. placing an extra order c. raising the selling price to reduce demand d. adding safety stock e. reducing the reorder point

d. adding safety stock

Among the advantages of cycle counting is that it a. makes the annual physical inventory more acceptable to management b. does not require the detailed record necessary when annual physical inventory is used c. does not require highly trained people d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory e. does not need to be performed for less expensive items

d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory

The purpose of safety stock is to a. replace failed units with good ones b. eliminate the possibility of a stockout c. eliminate the likelihood of a stockout due to erroneous inventory tally d. control the likelihood of a stockout due to the variability of demand during lead time e. protect the firm form a sudden decrease in demand

d. control the likelihood of a stockout due to variability of demand during lead time

The three classic types of negotiation strategies are a. vendor evaluation, vendor development, and vendor selection b. Theory X, Theory Y, and Theory Z c. many suppliers, few suppliers, and keiretsu d. cost-based price model, market-based price model, and competitive bidding e. None of the above

d. cost-based price model, market-based price model, and competitive bidding

A carpet manufacturer has delivered carpet directly to the end consume rather than to the carpet dealer. The carpet manufactures is practicing a. postponement b. cross-docking c. channel assembly d. drop shipping e. float reduction

d. drop shipping

The EOQ model with quantity discounts attempts to determine a. what is the lowest amount of inventory necessary to satisfy a certain service level b. what is the lowest purchasing price c. whether to use fixed-quantity or fixed-period order policy d. how many units should be ordered e. what is the shortest lead time

d. how many units should be ordered

In the make-or-buy decision, one of the reasons for buying is a. to assure adequate supply b. to obtain desired quality c. to remove supplier collusion d. inadequate capacity e. to maintain organizational talents

d. inadequate capacity

All of the following statements about ABC analysis are true except a. inventory may be categorized by measures other than dollar volume b. it categorizes on-hand inventory into three groups based on annual dollar volume c. it is an application of the Pareto principle d. it states that all items require the same degree of control e. it states that there are the critical few and the trivial many inventory items

d. it states that all items require the same degree of control

Which of the following is not an opportunity for effective management in the supply chain? a. accurate "pull" data b. vendor managed inventory c. postponement d. local optimization e. channel assembly

d. local optimization

The transfer of some of what are traditional internal activities and resources of a firm to outside vendor is a. a standard use of the make or buy decision b. not allowed by the ethics code of the Supply Management Institute c. offshoring d. outsourcing e. keiretsu

d. outsourcing

Hewlett-Packard withhold customization of its laser printers as long as possible. This is an example of a. vendor managed inventory b. standardization c. backward integration d. postponement e. timely customization

d. postponement

Which of the following is not one of the four main types of inventory? a. raw material inventory b. work-in-process inventory c. maintenance/repair/operating supply inventory d. safety stock inventory e. All of these are main types of inventory

d. safety stock inventory

The proper quantity of safety stock is typically determined by a. minimizing an expected stockout cost b. carrying sufficient safety stock so as to eliminate all stockouts c. meeting 95% of all demands d. setting the level of safety stock so that a given stockout risk is not exceeded d. setting the level of safety stock so that given stockout risk is not exceeded e. minimizing total costs

d. setting the level of safety stock so that a given stockout risk is not exceeded

Which one of the following is not a supply chain strategy? a. negotiation with many suppliers b. vertical integration c. keiretsu d. short-term relationships with few suppliers e. virtual companies

d. short-term relationships with few suppliers

A disadvantage of the fixed-period inventory system is that a. it involves higher ordering costs than the fixed quantity inventory system b. additional inventory records are required c. the average inventory level is decreased d. since there is not count of inventory during the review period, a stockout is possible e. orders usually are for larger quantities

d. since there is no count of inventory during the review period, a stockout is possible

Which of the following is not a condition that favors the success of vertical integration? a. availability of capital b. availability of managerial talent c. required demand d. small market share e. All of the above favor the success of vertical integration

d. small market share

A disadvantage of the "few suppliers" strategy is a. the risk of not being ready for technological change b. the lack of cost savings for customers and suppliers c. possible violations of the Sherman Antitrust Act d. the high cost of changing partners e. All of the above are disadvantages of the "few suppliers" strategy

d. the high cost of changing partners

Which of the following would not generally be a motive for a firm to hold inventories? a. to decouple or separate parts of the production process b. to provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to minimize holding costs e. All of the above are functions of inventory

d. to minimize holding costs

The primary purpose of the basic economic order quantity model is a. to calculate the reorder point, so that replenishments take place at the proper time b. to minimize the sum of carrying cost and holding cost c. to maximize the customer service level d. to minimize the sum of setup cost and holding cost e. to calculate the optimum safety stock

d. to minimize the sum of setup cost and holding cost

Consider a firm with a 2007 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 & equipment, how many weeks of supply does the firm hold? a. 12.50 b. 5.20 c. 2.60 d. 0.08 e. 4.16

e. 4.16

Which of the following are elements of inventory holding costs? a. housing costs b. material handling costs c. investment costs d. pilferage, scrap, and obsolescence e. All of the above are elements of inventory holding cost

e. All of the above are elements of inventory holding costs

Which of the following is a function of inventory? a. to decouple or separate parts of the production process b. to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to hedge against inflation e. All of the above are functions of inventory

e. All of the above are functions of inventory

In supply chain management, ethical issues a. are particularly important because of the enormous opportunities for abuse b. may be guided by company rules and codes of conduct c. become more complex the more global is the supply chain b. may be guided by the principles and standards of the Institute for Supply Management e. All of the above are true

e. All of the above are true

Which of the following statements regarding the reorder point is true? a. The reorder point is that quantity that triggers an action to restock an item. b. There is a reorder point even if lead time and demand during lead time are constant. c. The reorder point is larger than d x L if safety stock is present. d. The fixed-period model has no reorder point. e. All of the above are true.

e. All of the above are true

Which of the following statements about the basic EOQ model is true? a. If the ordering cost were to double, the EOQ would rise. b. if annual demand were to double, the EOQ would increase. 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. All of the above statements are true.

What term is used to describe the outsourcing of logistics? a. E-Logistics b. Shipper Managed Inventory (SMI) c. Hollow Logistics d. Sub-Logistics e. Third-Party Logistics

e. Third-Party Logistics

The "bullwhip" effect a. occurs as orders are relayed from retailers to wholesalers b. results in increasing fluctuations at each step of the sequence c. increases the costs associated with inventory in the supply chain d. occurs because of distortions in information in the supply chain e. all of the above

e. all of the above

Which of the following devices represents an opportunity for technology to improve security of container shipments? a. devices that identify truck and container location b. devices that sense motion c. devices that measure radiation or temperature d. devices that can communicate the breaking of a container lock or seal e. all of the above

e. all of the above

ABC analysis divides on-hand inventory into three classes, generally based upon a. item quality b. unit price c. the number of units on hand d. annual demand e. annual dollar volume

e. annual dollar volume

If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock? a. 8 units b. 10 units c. 16 units d. 64 units e. cannot be determined without lead time data

e. cannot be determined without lead time data

Which of the following is an opportunity for effective management in the supply chain? a. random "pull" data b. multistage control of replenishment c. the bullwhip effect d. customer managed inventory e. channel assembly

e. channel assembly

All of the following are "opportunities" for supply chain management except a. postponement b. drop shipment c. blanket orders d. channel assembly e. line balancing

e. line balancing

Which of the following is not a concern of the supply chain? a. warehousing and inventory levels b. credit and cash transfers c. suppliers d. distributors and banks e. maintenance scheduling

e. maintenance scheduling

When quantity discounts are allowed, the cost-minimizing order quantity a. is always and EOQ quantity b. minimizes the sum of holding and ordering costs c. minimizes the unit purchase price d. may be a quantity below that at which one qualifies fro that price e. minimizes the sum of holding, ordering, and product costs

e. minimizes the sum of holding, ordering, and product costs

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 18 b. about 24 c. about 32 d. about 38 e. more than 40

e. more than 40

Which category of inventory holding costs is much higher than average for rapid-change industries such as PCs and cell phones? a. housing costs b. material handling costs c. labor cost d. parts cost e. pilferage, scrap, and obsolescence

e. pilferage, scrap, and obsolescence

Which of the following is an advantage of the postponement technique? a. reduction in automation b. early customization of the product c. better quality of the product d. reduction in training costs e. reduction in inventory investment

e. reduction in inventory investment

In the make-or-buy decision, one of the reasons for making is a. to reduce inventory costs b. to obtain technical or management ability c. inadequate capacity d. reciprocity e. to assure adequate supply in terms of quantiy

e. to assure adequate supply in terms of quality