# Quiz 12: Inventory Management

Statistics

Q 1Q 1

One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

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True False

True

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Q 3Q 3

A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

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True False

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Q 4Q 4

The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.

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True False

Q 5Q 5

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: when to order and how much to order.

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True False

Q 6Q 6

In the EOQ formula, holding costs under 10 percent are expressed as percentages, above 10 percent are expressed as annual unit costs.

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True False

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Q 9Q 9

An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

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True False

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Q 14Q 14

In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

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True False

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Q 17Q 17

The average inventory level and the number of orders per year are inversely related: As one increases, the other decreases.

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True False

Q 18Q 18

The EOQ should be regarded as an approximate quantity rather than an exact quantity. Thus, rounding the calculated value is acceptable.

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True False

Q 19Q 19

Carrying cost is a function of order size; the larger the order quantity, the higher the inventory carrying cost.

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True False

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Q 23Q 23

Because price is not a factor in the EOQ formula, quantity discounts will not affect EOQ calculations.

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True False

Q 24Q 24

In the quantity discount model, if holding costs are given as a percentage of unit price, a graph of the total cost curves will have the same EOQ for each curve.

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True False

Q 25Q 25

In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.

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Q 29Q 29

The inventory value of the supply chain exceeds the inventory value of the organization's work-in-process inventory.

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Q 33Q 33

ROP models assume that demand during lead time is composed of a series of dependent daily demands.

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True False

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Q 37Q 37

Discrete stocking levels are used when an organization does not want visibility of inventory levels.

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True False

Q 38Q 38

The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

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True False

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Q 44Q 44

When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill.

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True False

Q 45Q 45

In the single-period model, the service level is the probability that demand will not exceed the stocking level in any period.

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Q 52Q 52

Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered.

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True False

Q 53Q 53

Which of the following is typically the largest of all inventory costs?
A)shortage cost
B)purchase cost
C)holding cost
D)ordering cost
E)pipeline cost

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Multiple Choice

Q 54Q 54

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.
A)foreorder costs
B)service costs
C)shortage costs
D)holding costs
E)setup costs

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Multiple Choice

Q 55Q 55

If there are shipping cost economies that result from bundling orders for different items together, the __________ model becomes a relatively more attractive option.
A)multi-period
B)reorder-point
C)fixed-order-quantity
D)fixed-order-interval
E)multi-item

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Multiple Choice

Q 56Q 56

Average demand for a particular item is 1,200 units per year. It costs $100 to place an order for this item, and it costs $24 to hold one unit of this item in inventory for one year. If the fixed-order-interval model is chosen in this instance, how often (on average)will this item be ordered?
A)once a month
B)once every other month
C)twice a month
D)twice every three months
E)three times every two months

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Multiple Choice

Q 57Q 57

Weekly demand for a particular item averages 30 units, with a standard deviation of 4. This item is managed with a fixed-order-interval model. The order interval is three weeks, and this item has a certain lead time of one week. The desired service level is 97.5 percent. Assume that it is now time to place another order, and there are 43 units on hand. How many units should be ordered?
A)120
B)93
C)136
D)46
E)84

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Multiple Choice

Q 58Q 58

Which of the following is not one of the assumptions of the basic EOQ model?
A)Annual demand requirements are known and constant.
B)Lead time does not vary.
C)Each order is received in a single delivery.
D)Quantity discounts are available.
E)Ordering and holding costs have been estimated reasonably accurately.

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Multiple Choice

Q 59Q 59

Which of the following interactions with vendors would potentially lead to inventory reductions?
A)reduced lead times
B)increased safety stock
C)less frequent purchases
D)larger batch quantities
E)longer order intervals

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Multiple Choice

Q 60Q 60

A nonlinear cost related to order size is the cost of
A)interest.
B)insurance.
C)taxes.
D)ordering.
E)space.

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Multiple Choice

Q 61Q 61

In a two-bin inventory system, the amount contained in the second bin is equal to the
A)ROP.
B)EOQ.
C)amount in the first bin.
D)optimum stocking level.
E)safety stock.

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Multiple Choice

Q 62Q 62

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves
A)line up.
B)equal zero.
C)do not line up.
D)cannot be calculated.
E)depend on the percentage assigned.

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Multiple Choice

Q 63Q 63

Dairy items, fresh fruit, and newspapers are items that
A)do not require safety stocks.
B)cannot be ordered in large quantities.
C)are subject to deterioration and spoilage.
D)require that prices be lowered every two days.
E)have minimal holding costs.

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Multiple Choice

Q 64Q 64

Which of the following is least likely to be included in order costs?
A)processing vendor invoices for payment
B)processing purchase orders
C)inspecting incoming goods for quantity
D)taking an inventory to determine how much is needed
E)temporary storage of delivered goods

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Multiple Choice

Q 65Q 65

In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about
A)10.
B)30.
C)50.
D)70.
E)90.

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Multiple Choice

Q 66Q 66

In the A-B-C classification system, items which account for about 15 percent of the annual dollar value, but which account for a majority of the inventory items, would be classified as
A)A items.
B)B items.
C)C items.
D)A items plus B items.
E)B items plus C items.

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Multiple Choice

Q 67Q 67

In the A-B-C classification system, items which account for about 60 percent of the annual dollar value, but only about 10 to 15 percent of the items in inventory, would be classified as
A)A items.
B)B items.
C)C items.
D)A items plus B items.
E)B items plus C items.

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Multiple Choice

Q 68Q 68

The purpose of cycle counting is to
A)count all the items in inventory.
B)count bicycles and motorcycles in inventory.
C)reduce discrepancies between inventory records and actual quantities.
D)reduce theft.
E)count 10 percent of the items each month.

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Multiple Choice

Q 69Q 69

The EOQ model is most relevant for which one of the following?
A)ordering items with dependent demand
B)determination of safety stock
C)ordering perishable items
D)determining fixed-interval order quantities
E)determining fixed order quantities

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Multiple Choice

Q 70Q 70

Which is not a true assumption in the basic EOQ model?
A)Each order is received in a single delivery.
B)Lead time does not vary.
C)No more than three items are involved.
D)Usage rate is constant.
E)No quantity discounts.

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Multiple Choice

Q 71Q 71

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of
A)safety stock replenishment.
B)economic order quantities.
C)reorder points.
D)fixed order intervals.
E)blanket ordering.

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Multiple Choice

Q 72Q 72

A cycle count program will usually require that Class A items be counted
A)daily.
B)once a week.
C)monthly.
D)quarterly.
E)more often than annually.

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Multiple Choice

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Multiple Choice

Q 74Q 74

In the basic EOQ model, if annual demand doubles, the effect on the EOQ is
A)It doubles.
B)It is four times its previous amount.
C)It is half its previous amount.
D)It is about 70 percent of its previous amount.
E)It increases by about 40 percent.

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Multiple Choice

Q 75Q 75

In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will
A)double.
B)increase, but not double.
C)decrease by a factor of 2.
D)remain the same.
E)increase, but more information is needed to calculate exactly how much.

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Multiple Choice

Q 76Q 76

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of
A)20.
B)square root of 200.
C)200.
D)400.
E)600.

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Multiple Choice

Q 77Q 77

In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is
A)10.
B)12.
C)24.
D)72.
E)144.

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Multiple Choice

Q 78Q 78

In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately
A)11.
B)20.
C)24.
D)28.
E)375.

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Multiple Choice

Q 79Q 79

Which of the following is not true for the economic production quantity model?
A)Usage rate is constant.
B)Production rate exceeds usage rate.
C)Run size exceeds maximum inventory.
D)There are no ordering or setup costs.
E)Average inventory is one-half maximum inventory.

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Multiple Choice

Q 80Q 80

Given the same demand, setup/ordering costs, and carrying costs, the EPQ calculated using incremental replenishment will be ____________ if instantaneous replenishment was assumed.
A)greater than the EOQ
B)equal to the EOQ
C)smaller than the EOQ
D)greater than or equal to the EOQ
E)smaller than or equal to the EOQ

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Multiple Choice

Q 81Q 81

The introduction of quantity discounts will cause the optimum order quantity to be
A)smaller.
B)unchanged.
C)greater.
D)smaller or unchanged.
E)unchanged or greater.

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Multiple Choice

Q 82Q 82

A fill rate is the percentage of _____ filled by stock on hand.
A)shipments
B)demand
C)inventory
D)safety stock
E)lead time

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Multiple Choice

Q 83Q 83

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must
A)have the lowest total cost.
B)be in a feasible range.
C)be to the left of the price break quantity for that price.
D)have the largest quantity compared to other EOQs.
E)have smaller ordering costs than the others.

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Multiple Choice

Q 84Q 84

Which one of the following is not generally a determinant of the reorder point?
A)rate of demand
B)length of lead time
C)lead time variability
D)stockout risk
E)purchase cost

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Multiple Choice

Q 85Q 85

If no variations in demand or lead time exist, the ROP will equal
A)the EOQ.
B)expected usage during lead time.
C)safety stock.
D)the service level.
E)the EOQ plus safety stock.

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Multiple Choice

Q 86Q 86

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is
A)100 units.
B)200 units.
C)300 units.
D)600 units.
E)700 units.

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Multiple Choice

Q 87Q 87

Which one of the following is implied by a lead time service level of 95 percent?
A)Approximately 95 percent of demand during lead time will be satisfied.
B)Approximately 95 percent of inventory will be used during lead time.
C)The probability is 0.95 that demand during lead time will exactly equal the amount on hand at the beginning of lead time.
D)The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.
E)The probability is 0.95 that the order will arrive after the on-hand inventory is exhausted.

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Multiple Choice

Q 88Q 88

Which one of the following is implied by an annual service level of 95 percent?
A)Approximately 95 percent of demand during lead time will be satisfied.
B)The probability is 0.95 that demand will exceed supply during lead time.
C)The probability is 0.95 that demand will equal supply during lead time.
D)The probability is 0.95 that demand will not exceed supply during lead time.
E)Approximately 95 percent of all demand will actually be satisfied directly from on-hand inventory.

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Multiple Choice

Q 89Q 89

Daily usage is exactly 60 gallons per day. Lead time is normally distributed with a mean of 10 days and a standard deviation of 2 days. What is the standard deviation of demand during lead time?
A)60 times 2
B)60 times the square root of 2
C)60 times the square root of 10
D)60 times 10
E)10 times the square root of 2

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Multiple Choice

Q 90Q 90

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?
A)20 times 2
B)20 times 10
C)2 times the square root of 20
D)2 times the square root of 10
E)400 times the square root of 10

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Multiple Choice

Q 91Q 91

All of the following are possible reasons for using the fixed-order-interval model except
A)supplier policy encourages use.
B)grouping orders can save in shipping costs.
C)the required safety stock is lower than with an EOQ/ROP model.
D)it is suited to periodic checks of inventory levels rather than continuous monitoring.
E)continuous monitoring is not practical.

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Multiple Choice

Q 92Q 92

Which of these products would be most apt to involve the use of a single-period model?
A)gold coins
B)hammers
C)fresh fish
D)calculators
E)frozen corn

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Multiple Choice

Q 93Q 93

In a single-period model, if shortage and excess costs are equal, then the optimum service level is
A)0.
B)0.33.
C)0.50.
D)0.67.
E)0.75.

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Multiple Choice

Q 94Q 94

In a single-period model, if shortage cost is four times excess cost, then the optimum service level is _____ percent.
A)100
B)80
C)60
D)40
E)20

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Multiple Choice

Q 95Q 95

In the single-period model, if excess cost is double the shortage cost, the approximate stockout risk, assuming an optimum service level, is ___ percent.
A)100
B)67
C)50
D)33
E)5

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Multiple Choice

Q 96Q 96

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are 0.3, 0.3, 0.2, and 0.2, respectively. If two units are stocked, what is the probability of selling both of them?
A)0.5
B)0.6
C)0.7
D)0.8
E)0.9

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Multiple Choice

Q 97Q 97

An operations strategy for inventory management should work toward
A)increasing lot sizes.
B)decreasing lot sizes.
C)increasing safety stocks.
D)decreasing service levels.
E)increasing order quantities.

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Multiple Choice

Q 98Q 98

Cycle stock inventory is intended to deal with
A)excess costs.
B)shortage costs.
C)stockouts.
D)expected demand.
E)quantity discounts.

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Multiple Choice

Q 99Q 99

An operations strategy which recognizes high carrying costs and reduces ordering costs will result in
A)unchanged order quantities.
B)slightly decreased order quantities.
C)greatly decreased order quantities.
D)slightly increased order quantities.
E)greatly increased order quantities.

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Multiple Choice

Q 100Q 100

The need for safety stocks can be reduced by an operations strategy which
A)increases lead time.
B)increases lead time variability.
C)increases lot sizes.
D)decreases ordering costs.
E)decreases lead time variability.

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Multiple Choice

Q 101Q 101

If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be
A)20.
B)50.
C)70.
D)80.
E)130.

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Multiple Choice

Q 102Q 102

With an A-B-C system, an item that had a high demand but a low annual dollar volume would probably be classified as
A)A.
B)B.
C)C.

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Multiple Choice

Q 103Q 103

The fixed-order-interval model would be most likely to be used for this situation
A)A company has switched from mass production to lean production.
B)Production is done in batches.
C)Spare parts are ordered when a new machine is purchased.
D)Grouping orders can save shipping costs.
E)Demand is highly variable

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Multiple Choice

Q 104Q 104

Which item would be least likely to be ordered under a fixed-order-interval system?
A)textbooks at a college bookstore
B)auto parts at an assembly plant
C)cards at a gift shop
D)canned peas at a supermarket
E)magazines at a news stand

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Multiple Choice

Q 105Q 105

Which one of these would not be a factor in determining the reorder point?
A)the EOQ
B)the lead time
C)the variability of demand
D)the demand or usage rate
E)all are factors

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Multiple Choice

Q 106Q 106

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the economic production quantity would be approximately
A)the same.
B)20 percent larger.
C)40 percent larger.
D)20 percent smaller.
E)40 percent smaller.

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Multiple Choice

Q 107Q 107

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the maximum inventory would be approximately
A)70 percent higher.
B)30 percent higher.
C)the same.
D)30 percent lower.
E)70 percent lower.

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Multiple Choice

Q 108Q 108

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $0.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
At what point should he reorder Stein beer?
A)0 cases remaining
B)4 cases remaining
C)12 cases remaining
D)16 cases remaining
E)20 cases remaining

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Multiple Choice

Q 109Q 109

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the length of an order cycle?
A)0.25 days
B)3 days
C)1 day
D)4 days
E)20 days

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Multiple Choice

Q 110Q 110

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?
A)4 cases
B)12 cases
C)8 cases
D)20 cases
E)16 cases

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Multiple Choice

Q 111Q 111

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be theaverage daily total inventory costs, EXCLUDING the cost of the beer?
A)$2.00
B)$4.00
C)$1.28
D)$3.28
E)$2.56

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Multiple Choice

Q 112Q 112

The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
What is the economic order quantity for Stein beer?
A)8 cases
B)11 cases
C)14 cases
D)20 cases
E)32 cases

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Multiple Choice

Q 113Q 113

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. At what point should she reorder pepperoni?
A)20 pounds remaining
B)40 pounds remaining
C)60 pounds remaining
D)80 pounds remaining
E)100 pounds remaining

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Multiple Choice

Q 114Q 114

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle?
A)0 days
B)0.25 days
C)3 days
D)4 days
E)5 days

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Multiple Choice

Q 115Q 115

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the average inventory level?
A)20 pounds
B)40 pounds
C)60 pounds
D)80 pounds
E)100 pounds

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Multiple Choice

Q 116Q 116

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be theaverage total daily costs, including the cost of the pepperoni?
A)$60.00
B)$63.20
C)$64.00
D)$64.10
E)$65.00

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Multiple Choice

Q 117Q 117

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. What is the economic order quantity for pepperoni?
A)20 pounds
B)40 pounds
C)60 pounds
D)80 pounds
E)100 pounds

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Multiple Choice

Q 118Q 118

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, at what point should bills be reordered?
A)0 bills remaining
B)417 bills remaining
C)2,500 bills remaining
D)10,000 bills remaining
E)12,500 bills remaining

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Multiple Choice

Q 119Q 119

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the length of an order cycle?
A)0.48 days
B)2.08 days
C)6 days
D)8.4 days
E)14.4 days

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Multiple Choice

Q 120Q 120

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level?
A)$3,000
B)$6,000
C)$12,500
D)$300,000
E)$600,000

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Multiple Choice

Q 121Q 121

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the average monthly total costs, EXCLUDING the value of the bills?
A)$625
B)$1,250
C)$2,500
D)$3,125
E)$37,500

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Multiple Choice

Q 122Q 122

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, what is the economic order quantity?
A)600 bills
B)3,000 bills
C)949 bills
D)6,215 bills
E)12,500 bills

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Multiple Choice

Q 123Q 123

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $0.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. At what point should resin be reordered?
A)0 kilograms remaining
B)50 kilograms remaining
C)200 kilograms remaining
D)400 kilograms remaining
E)500 kilograms remaining

Free

Multiple Choice

Q 124Q 124

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If order size was 1,000 kilograms of resin, what would be the length of an order cycle?
A)0.05 days
B)4 days
C)16 days
D)20 days
E)50 days

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Multiple Choice

Q 125Q 125

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?
A)50 kilograms
B)200 kilograms
C)500 kilograms
D)800 kilograms
E)1,000 kilograms

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Multiple Choice

Q 126Q 126

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be theaverage daily total inventory costs, EXCLUDING the cost of the resin?
A)$5
B)$10
C)$20
D)$25
E)$40

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Multiple Choice

Q 127Q 127

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. What is the economic order quantity for resin?
A)50 kilograms
B)100 kilograms
C)250 kilograms
D)500 kilograms
E)1,000 kilograms

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Multiple Choice

Q 128Q 128

Which of the following can be calculated by dividing profit after taxes by total assets?
A)return on investment
B)return on equity
C)return on assets
D)return on sales
E)return on invested capital

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Multiple Choice

Q 129Q 129

Which of the following are not types of inventory?
A)customer orders
B)raw materials
C)work-in-progress
D)tools
E)goods in transit

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Multiple Choice

Q 130Q 130

_____is that the average amount of inventory in a system is equal to the product of the average demand rate and the average time a unit is in the system.
A)Little's Law
B)Little's Operation
C)Little's Test
D)Little's Stockout
E)Little's Demand

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Multiple Choice

Q 131Q 131

What are the two functions that management must be concerned with in regard to inventory?
A)estimating costs / developing an inventory counting system
B)creating accurate forecasts / communicating with the entire supply chain
C)tracking inventory / developing an operations strategy
D)establishing a classification system / creating a perpetual inventory system
E)establishing a system to track items / making decisions about the quantity and when to order

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Multiple Choice

Q 132Q 132

The perpetual inventory system is also known as what type of review system?
A)interval
B)periodic
C)continuous
D)estimated
E)scheduled

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Multiple Choice

Q 133Q 133

Which system requires a physical count of items that are in inventory made at periodic intervals?
A)interval
B)periodic
C)continuous
D)estimated
E)scheduled

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Multiple Choice

Q 134Q 134

Which system keeps track of the items removed from inventory in order to provide real-time levels?
A)interval
B)periodic
C)perpetual
D)estimated
E)scheduled

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Multiple Choice