test 3 ops

Which of the following would NOT generally be a motive for a firm to hold​ inventories? A. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand B. to decouple various parts of the production process C. to take advantage of quantity discounts D. to minimize holding costs E. to hedge against inflation

D. to minimize holding costs

A certain type of computer costs​ $1,000, and the annual holding cost is​ 25% of the value of the item. Annual demand is​ 10,000 units, and the order cost is​ $150 per order. What is the approximate economic order​ quantity?

110

ABC analysis classifies inventoried items into three​ groups, usually based on annual units or quantities used.

False

ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

False

In cycle​ counting, the frequency of item counting and stock verification usually varies from item to item depending upon the​ item's classification.

true

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?

141

The assumptions of the production order quantity model are met in a situation where annual demand is 3650​ units, setup cost is​ $50, holding cost is​ $12 per unit per​ year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this​ problem?

184

Among the advantages of cycle counting is that​ it: A. does not require the detailed records necessary when annual physical inventory is used. B. does not require highly trained people. C. 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. E. makes the annual physical inventory more acceptable to management.

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

Which of the following is a function of​ inventory? A. to take advantage of quantity discounts B. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C. to hedge against inflation D. to decouple various parts of the production process E. All of the above are functions of inventory.

E. All of the above are functions of inventory.

Which of the following statements regarding the reorder point is​ TRUE? A. There is a reorder point even if lead time and demand during lead time are constant. B. The reorder point is larger than d times× L if safety stock is present. C. The reorder point is that quantity that triggers an action to restock an item. D. A shorter lead time implies a smaller reorder point. E. All of the above are true.

E. All of the above are true.

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown​ below, the average amount of inventory on​ hand: ​Q*​ = StartRoot StartFraction 2 DS Over Upper H EndFraction EndRoot 2DS H A. goes down if the holding cost per unit goes down. B. is zero. C. goes down if the setup cost per order goes up. D. is smaller than the holding cost per unit. E. is​ one-half of the economic order quantity.

E. is​ one-half of the economic order quantity.

Which of the following is an element of inventory holding​ costs? A. housing costs B. investment costs C.material handling costs D. ​pilferage, scrap, and obsolescence E.All of the above are elements of inventory holding costs.

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

A major challenge in inventory management is to maintain a balance between inventory investment and customer service

True

Which of the following statements regarding the production order quantity model is​ TRUE? A. It relaxes the assumption that the demand rate is constant. B. It relaxes the assumption that all the order quantity is received at one time. C. It minimizes inventory. D. It applies only to items produced in the​ firm's own production departments. E. It minimizes the total production costs.

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

All EXCEPT which of the following statements about ABC analysis are​ true? A. ABC analysis is an application of the Pareto principle. B. In ABC​ analysis, inventory may be categorized by measures other than dollar volume. C. ABC analysis categorizes​ on-hand inventory into three groups based on annual dollar volume. D. ABC analysis suggests that all items require the same high degree of control. E. ABC analysis suggests that there are the critical few and the trivial many inventory items.

D. ABC analysis suggests that all items require the same high degree of control.