MGMT Exam 2
For the basic EOQ model, what is the formula for the total annual cost?
(D/Q)S + (Q/2)H
If the EOQ is ordered, which of the following is true?
Annual ordering cost is equal to annual holding cost
Percentage of orders shipped on schedule is a good measure of finished goods customer service if
all orders and customers have similar value.
The ranking in ABC inventory analysis is based on what?
annual dollar usage
What costs are considered in the basic EOQ model?
annual ordering costs + annual holding costs
Which is the primary inventory function that is activated after coupons are distributed to customers?
anticipation inventory
Causes of variation that can be identified and eliminated are called
assignable
JIT is applied to
both manufacturing and service organizations
the person that comes from the top ranks of an organization and is responsible for providing direction and overseeing all aspects of a six-sigma implementation process is called a
champion
Which of the following is a characteristic of bottom-round management?
consensus management by committees or teams
On a control chart, what separates common from assignable causes of variation?
control limits
The number of kanbans or containers needed at a workstation is dependent on
demand rate
Which of the following is a role of JIT management?
developing an incentive system to reward workers for their efforts
JIT considers waste anything that
does not add value
The advantages of cell manufacturing using a U-shaped cell include
easy reach and flexibility for workers
What does EPQ stand for?
economic production quantity
The central belief of the JIT philosophy is
elimination of waste
In a JIT environment, workers need to
feel secure in their jobs
Being able to keep costs low while changing the volume of production is an example of
flexibility
A process chart is a
graph that shows whether a sample falls within the common range
With regard to suppliers, JIT typically requires
information sharing
According to JIT, __________ is carried to cover up a wide variety of problems, such as poor quality, demand uncertainty, and slow delivery.
inventory
Which of the below is NOT one of the three components of the holding costs?
item costs
What is the term that means giving workers authority to stop the production line when quality problems are encountered?
jidoka
An improvement tool that utilizes cross-functional teams to plan and deliver improvements to specific processes during two- or three-day marathon sessions is called a ___________________.
kaizen blitz
JIT uses a pull system where communication starts with either the customer or with the _________ workstation in the production line.
last
Which of the following is an assumption of the basic EOQ model?
lead time is known and constant
Which inventory function helps firms garner quantity discounts?
lot size inventory
Uniform Plant Loading
making the same mix of products every day in small quantities
The range is an example of what?
measures of variability
The ultimate goal of JIT is to produce products in a lot size of
one unit
Which basic EOQ assumption does the EPQ model relax?
orders arrive at once
JIT considers __________ to be a company's most precious resource.
people
Regular inspections and maintenance designed to keep a machine operational is __________ maintenance.
preventive
JIT is a _______ system.
pull
Variation in the production process leads to
quality defects
Which of the following is an assumption of the basic EOQ model?
quantity discounts are not considered
Common causes of variation are also known as
random causes
The benefits of long-term relationships with a small number of suppliers include
receiving payments at regular intervals rather than on delivery of goods
JIT is often mistakenly assumed to
refer to only just-in-time manufacturing.
Holding costs have three components: capital, storage, and
risk costs
JIT manufacturing cannot succeed if ____ costs are too high
set up
What is the term for an adjustment of a machine after making one product type so that production can begin for another product type?
setup
All of the following affect holding costs EXCEPT
setup cost
A SKU is a ______________ at a _____________ geographic location.
specific item, particular
The technique of fixed-order quantity involves a company
specifying the number of units to order whenever an order is placed
Which inventory function provides a cushion against unexpected supply shortage?
speculative inventory
What is a distribution called when the same numbers of observations are below the mean as are above the mean?
symmetric
Which of the following is used in determining the order quantity in the periodic review system?
target inventory level
In a periodic review inventory system, how many units are ordered?
target inventory level - on hand balance
The different characteristics that can be measured by control charts can be divided into what two groups?
variables and attributes
Beliefs that help define the JIT philosophy include ________.
visibility
The formula to calculate weeks of supply is?
weeks of supply = average inventory on hand in dollars/average weekly usage in dollars
What does WIP stand for?
work in process
JIT flexibility refers to
workers being able to perform many different tasks
What is the probability of a Type I error for a control chart with limits set at + 3 standard deviations from the mean?
.26%
For the standard normal distribution, how much confidence is provided within 2 standard deviations above and below the mean?
95.44%
Adding backups ALWAYS increases the reliability of the system even if the backup is less reliable than the original reliability. Select one: a. True b. False
A
A control chart is a schematic diagram of the sequence of steps involved in an operation or process. Select one: A. True B. False
B
A series system is composed of the components #1, #2 and #3, with respective reliabilities of 0.85, 0.82 and 0.90. The management is concerned with the low reliability of the system, and would like to add backups to enhance the reliability of the system. Due to the high cost, only one of the three components can receive the backup. Which component do you think should receive the backup? Select one: a. Component #3, b/c the last one is always the decisive element. b. Component #2, b/c it's the weakest link of the system. c. Component #2, b/c the middle one has the most crucial role in a series system. d. Component #1, b/c it can negatively impact the subsequent components. e. Component #3, b/c strengthening the strongest component benefits the system the most.
B
What technique answers the question of whether the process is functioning properly or not? a. scatter plotting b. statistical process control c. acceptance sampling d. fishbone diagramming e. experimental design
B
Suppose a product has two parts, both of which must be working in order for the product to function. The reliability of the first part is 0.8, and the reliability of the second part is 0.9. What is the reliability of the product? Note: Series formula: Rs = R1*R2*... Parallel formula: Rs = 1-(1-R1)*(1-R2)... Select one: a. 0.85 b. 1.70 c. 0.72 d. None of the other answers is correct e. 0.98
C ( .8 * .9) = .72
On a control chart, what separates common from assignable causes of variation?
Control Limits
What are the three areas for Inventory objectives?
Customer service, cost-efficient operations, and minimum inventory investment
Which of the following is associated with descriptive statistics? a. process capability index b. proportion c. control chart d. standard deviation
D
Which of the following is an assumption of the basic EOQ model?
Demand is known and constant
What is the term for the probability that a value falling outside the control limits is still due to normal variation? Select one: a. Normalization anomaly b. Beta risk c. Standard deviation irregularity d. Type II error e. Type I error
E
Hand tools, lubricants, and cleaning supplies are usually examples of what?
MRO inventory
Which of the following inventory functions does NOT involve end products sold to customers?
MRO inventory
_____________________ is the probability that demand during lead time will NOT exceed on-hand inventory.
Order-cycle service level
Which basic EOQ assumption does the EPQ model relax?
Orders arrive at once
What implies that about 20% of the inventory items will account for about 80% of the inventory value?
Paretos law
For the basic EOQ model, how many units should be ordered each time that an order is placed?
SQRT(2*DS/H)
The formula for calculating safety stock, when an estimate of demand during lead time and its standard deviation are known, is which of the following?
SS = z*σdL
Which of the below statements is not true with regards to Safety Stock (SS) in the EOQ model?
SS affects the value of order quantity (EOQ)
What is the first step that should be taken if an observation falls below the lower control limit on a control chart?
Search for assignable causes
An x-bar chart is an example of what?
Statistical Process Control
When is the basic EOQ model a special case of the EPQ model?
The production rate per day approaches infinity
What is the replenishment of inventory at the customer's facility?
Vendor-managed inventory
