Question 1

In the basic EOQ model,annual setup cost is equal to:

Accepted Answer

A)  the EOQ multiplied by setup cost.
B)  the EOQ divided by setup cost.
C)  setup cost multiplied by the ratio of the annual demand to the EOQ.
D)  setup cost multiplied by the ratio of the EOQ to annual demand.
E)  setup cost multiplied by annual demand.F) C) and E)
G) All of the above

Question 2

If she was to order 80 pounds of pepperoni at a time,what would be the length of an order cycle?

Accepted Answer

A)  0 days.
B)  0.25 days.
C)  3 day.
D)  4 days.
E)  5 days.F) A) and D)
G) A) and C)

Question 3

Which of the following would generally have independent demand?

Accepted Answer

A)  Subassemblies.
B)  Component parts.
C)  Finished goods.
D)  All of these.
E)  None of these.F) B) and E)
G) A) and B)

Question 4

MRP is a system for determining optimal order quantities for dependent-demand products.

Accepted Answer

A) True 
 B)False

Question 5

In the basic EOQ model,if annual demand doubles what is the effect on the EOQ?

Accepted Answer

A)  It doubles.
B)  It is four times its previous amount.
C)  It is half its previous amount.
D)  It is about 70% of its previous amount.
E)  It increases by about 40%.F) A) and B)
G) B) and E)

Question 6

In the EOQ model with quantity discounts,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.

Accepted Answer

A) True 
 B)False

Question 7

The EOQ approach minimizes annual setup costs.

Accepted Answer

A) True 
 B)False

Question 8

Inspection of goods for quality and quantity upon arrival is part of setup costs.

Accepted Answer

A) True 
 B)False

Question 9

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not true for the EOQ model with gradual replenishment?

Accepted Answer

A)  Demand is constant.
B)  Production rate exceeds usage rate.
C)  Run size exceeds maximum inventory.
D)  There are no setup costs.
E)  Average inventory is one-half maximum inventory.F) All of the above
G) None of the above D

Question 11

An inventory system whose current inventory level is monitored with each change is called a periodic-review system.

Accepted Answer

A) True 
 B)False

Question 12

The JIT philosophy is one of avoiding waste wherever it might occur in the production process.
Multiple Choice Questions

Accepted Answer

A) True 
 B)False

Question 13

Setup costs can occur through purchasing or manufacturing products.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not included in setup costs?

Accepted Answer

A)  Typing up invoices.
B)  Moving delivered goods to temporary storage.
C)  Inspecting incoming goods for quality.
D)  Taking an inventory to determine how much is needed.
E)  Temporary storage of delivered goods.F) B) and C)
G) C) and D) E

Question 15

When developing an inventory policy,the only relevant costs are the variable costs.

Accepted Answer

A) True 
 B)False  True

Question 16

Which of the following are part of a MRP system?

Accepted Answer

A)  Production schedule.
B)  Bill of materials.
C)  Inventory status records.
D)  All of the above.
E)  None of the above.F) B) and D)
G) A) and D)

Question 17

EOQ inventory models are basically concerned with the timing of orders.

Accepted Answer

A) True 
 B)False

Question 18

Subassemblies are an example of independent demand items.

Accepted Answer

A) True 
 B)False

Question 19

If the cost of holding inventory is high relative to shortage costs,then allowing shortages may be a good policy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following items would be most likely to have dependent demand?

Accepted Answer

A)  Electric starters.
B)  Toy trains.
C)  Flowers.
D)  Chocolate chip cookies.
E)  None of the above.F) C) and D)
G) None of the above

Exam 21: CD - Inventory Management With Known Demand

In the basic EOQ model,annual setup cost is equal to:

Correct AnswerverifiedShow Answer

If she was to order 80 pounds of pepperoni at a time,what would be the length of an order cycle?

Correct AnswerverifiedShow Answer

Which of the following would generally have independent demand?

Correct AnswerverifiedShow Answer

MRP is a system for determining optimal order quantities for dependent-demand products.

Correct AnswerverifiedShow Answer

In the basic EOQ model,if annual demand doubles what is the effect on the EOQ?

Correct AnswerverifiedShow Answer

In the EOQ model with quantity discounts,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.

Correct AnswerverifiedShow Answer

The EOQ approach minimizes annual setup costs.

Correct AnswerverifiedShow Answer

Inspection of goods for quality and quantity upon arrival is part of setup costs.

Correct AnswerverifiedShow Answer

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages.

Correct AnswerverifiedShow Answer

Which of the following is not true for the EOQ model with gradual replenishment?

Correct AnswerverifiedD

An inventory system whose current inventory level is monitored with each change is called a periodic-review system.

Correct AnswerverifiedShow Answer

The JIT philosophy is one of avoiding waste wherever it might occur in the production process. Multiple Choice Questions

Correct AnswerverifiedShow Answer

Setup costs can occur through purchasing or manufacturing products.

Correct AnswerverifiedShow Answer

Which of the following is not included in setup costs?

Correct AnswerverifiedE

When developing an inventory policy,the only relevant costs are the variable costs.

Correct AnswerverifiedTrue

Which of the following are part of a MRP system?

Correct AnswerverifiedShow Answer

EOQ inventory models are basically concerned with the timing of orders.

Correct AnswerverifiedShow Answer

Subassemblies are an example of independent demand items.

Correct AnswerverifiedShow Answer

If the cost of holding inventory is high relative to shortage costs,then allowing shortages may be a good policy.

Correct AnswerverifiedShow Answer

Which of the following items would be most likely to have dependent demand?

Correct AnswerverifiedShow Answer

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D

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E

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True

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