Question 1

In the perishable product model,the service level is the probability that demand will not exceed the stocking level.

Accepted Answer

A) True 
 B)False

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

Holding costs may include:

Accepted Answer

A)  cost of warehouse space.
B)  record keeping.
C)  insurance.
D)  taxes.
E)  All of the above.F) A) and B)
G) B) and C)

Question 4

The ABC control method involves classifying items by unit cost.

Accepted Answer

A) True 
 B)False

Question 5

Which one of these would not be a factor in determining the reorder point?

Accepted Answer

A)  The EOQ.
B)  The lead time.
C)  The average demand.
D)  Holding costs.
E)  All are factors.F) A) and C)
G) A) and B)

Question 6

When the item is used in production or is a spare part for a production machine,shortage costs in the perishable product model include the cost of lost production.

Accepted Answer

A) True 
 B)False

Question 7

The reorder point equals the average sales during lead time plus the number of backlogged items.

Accepted Answer

A) True 
 B)False

Question 8

In the ABC control method,items that have high unit costs are always classified as A items.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not an assumption of the (R,Q) model?

Accepted Answer

A)  Each application involves a single stable product.
B)  The inventory level is under continuous review.
C)  The only decisions to be made are to choose R and Q.
D)  The lead time is fixed.
E)  If a stockout occurs,the excess demand is backlogged.F) D) and E)
G) A) and B)

Question 10

Which one of the following is not generally a determinant of the reorder point?

Accepted Answer

A)  Average demand.
B)  Length of lead time.
C)  Setup cost.
D)  Shortage cost.
E)  Purchase cost.F) C) and D)
G) B) and D)

Question 11

The need for safety stocks can be reduced by an operation strategy which:

Accepted Answer

A)  increases lead time.
B)  increases lot sizes.
C)  decreases ordering costs.
D)  decreases lead time variability.
E)  None of the above.F) C) and E)
G) B) and D)

Question 12

Which of the following is not an assumption of the perishable product model?

Accepted Answer

A)  Each application involves a single time period.
B)  It is possible to dispose of any units of the product remaining at the end of the period.
C)  The only decision to be made is how many units to order.
D)  The probability distribution of demand is unknown.
E)  There are costs incurred for both underordering and overordering.F) B) and C)
G) B) and D)

Question 13

Service level can be measured by:

Accepted Answer

A)  the probability that a stockout will not occur during lead time.
B)  The average number of stockouts per year.
C)  The average delay in filling backorders.
D)  The average percentage of annual demand that can be satisfied immediately.
E)  All of the above.F) D) and E)
G) C) and D)

Question 14

A two-bin system is an example of a continuous review inventory system.

Accepted Answer

A) True 
 B)False

Question 15

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:

Accepted Answer

A)  100 units.
B)  200 units.
C)  300 units.
D)  600 units.
E)  700 units.F) A) and D)
G) None of the above

Question 16

Which of these products would be most apt to involve the use of a perishable product model?

Accepted Answer

A)  Gold coins.
B)  Hammers.
C)  Fresh fish.
D)  Calculators.
E)  Frozen corn.F) None of the above
G) B) and C)

Question 17

A multiechelon inventory system is a system with multiple echelons of inventory where each echelon is used to replenish the inventories at the various sites of the next lower echelon.

Accepted Answer

A) True 
 B)False

Question 18

The choice of the distribution to use as the demand distribution has little effect on the reorder point.

Accepted Answer

A) True 
 B)False

Question 19

If,in a perishable product inventory situation,the probabilities of demand being 1,2,3,or 4 units are 0.3,0.3,0.2,and 0.2 respectively,what is the service level if two units are stocked?

Accepted Answer

A)  0.2.
B)  0.3
C)  0.5.
D)  0.6.
E)  0.8.F) All of the above
G) B) and E)

Question 20

The rate of demand is an important factor in determining the reorder point.

Accepted Answer

A) True 
 B)False

Exam 22: CD - Inventory Management With Uncertain Demand

In the ABC control method,items that have high unit costs are always classified as A items.

Correct AnswerverifiedShow Answer

When the item is used in production or is a spare part for a production machine,shortage costs in the perishable product model include the cost of lost production.

Correct AnswerverifiedShow Answer

The reorder point equals the average sales during lead time plus the number of backlogged items.

Correct AnswerverifiedShow Answer

Which one of the following is not generally a determinant of the reorder point?

Correct AnswerverifiedShow Answer

Which of these products would be most apt to involve the use of a perishable product model?

Correct AnswerverifiedShow Answer

Service level can be measured by:

Correct AnswerverifiedShow Answer

The choice of the distribution to use as the demand distribution has little effect on the reorder point.

Correct AnswerverifiedShow Answer

If,in a perishable product inventory situation,the probabilities of demand being 1,2,3,or 4 units are 0.3,0.3,0.2,and 0.2 respectively,what is the service level if two units are stocked?

Correct AnswerverifiedShow Answer

A multiechelon inventory system is a system with multiple echelons of inventory where each echelon is used to replenish the inventories at the various sites of the next lower echelon.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A two-bin system is an example of a continuous review inventory system.

Correct AnswerverifiedShow Answer

Holding costs may include:

Correct AnswerverifiedShow Answer

In the perishable product model,the service level is the probability that demand will not exceed the stocking level.

Correct AnswerverifiedShow Answer

The rate of demand is an important factor in determining the reorder point.

Correct AnswerverifiedShow Answer

Which one of these would not be a factor in determining the reorder point?

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Which of the following is not an assumption of the perishable product model?

Correct AnswerverifiedShow Answer

Which of the following is not an assumption of the (R,Q) model?

Correct AnswerverifiedShow Answer

The ABC control method involves classifying items by unit cost.

Correct AnswerverifiedShow Answer

The need for safety stocks can be reduced by an operation strategy which:

Correct AnswerverifiedShow Answer

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