Operations Management Study Set 1

Business

Quiz 13 :
Inventory Management

Quiz 13 :
Inventory Management

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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
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True

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The objective of inventory management is to minimize the cost of holding inventory.
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True False
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False

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

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The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.
True False
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The two main concerns of inventory control relate to the costs and the level of customer service.
True False
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To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders.
True False
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In the EOQ formula, holding costs under 10% are expressed as percentages, above 10% are expressed as annual unit costs.
True False
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DVD recorders would be an example of independent demand items.
True False
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Reorder point models are primarily used for dependent demand items.
True False
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An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.
True False
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Decoupling operations applies to the railroad industry.
True False
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Interest, insurance, and opportunity costs are all associated with holding costs.
True False
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The A-B-C approach involves classifying inventory items by unit cost, with expensive items classified as 'A' items and low cost items classified as 'C' items.
True False
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An inventory buffer adds value and lowers cost in all supply chains.
True False
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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.
True False
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EOQ inventory models are basically concerned with the timing of orders.
True False
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The average inventory level is inversely related to order size.
True False
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The average inventory level and the number of orders per year are inversely related: As one increases, the other decreases.
True False
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The EOQ should be regarded as an approximate quantity rather than an exact quantity.Thus, rounding the calculated value is acceptable.
True False
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Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.
True False
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