Home / My courses / COMM-225-2204-FF / 14 February - 20 February / Practice Quiz (Chapter 12)

Question 1 Demand for a perishable item can be described by a uniform distribution that ranges from 18 units per
Correct period to 30 units per period. If shortage and excess costs are equal, the optimal stocking level would be:

Mark 1.00 out of

Select one:
1.00
a. 18
b. 24 !

c. 30

d. 36

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 2 For a fixed order-quantity, ROP model the daily demand rate is normally distributed with a mean of 50
Correct units and a standard deviation of 5 units. The lead time is 9 days, Q = 500 units, and the lead time

Mark 1.00 out of service level is 90%. What are approximate values for safety stock and the ROP?

1.00
Select one:
a. 45 and 500
b. 45 and 495

c. 19 and 500
d. 19 and 469 !

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 3 If there is no variability in either the daily demand or the lead time, the ROP for a fixed order-quantity
Not complete inventory model is equal to:

Marked out of
Select one:
1.00
a. Safety stock

b. Daily demand plus lead time

c. Expected demand plus safety stock

d. Daily demand times lead time

Check

Question 4 In an A-B-C system, A items typically represent about what percent of the types of items, SKUs, held in
Not complete inventory?

Marked out of
Select one:
1.00
a. 15-20%
b. 30-40%
c. 40-60%

d. Over 75%

Check

Question 5 In a single period model, if shortage cost is twice the excess cost, then the service level should be
Correct chosen as:

Mark 1.00 out of

Select one:
1.00
a. 33%
b. 50%
c. 67% !

d. 100%

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 6 In the two-bin system for implementing a fixed order quantity / ROP model, the quantity in the second bin
Not complete is enough to satisfy what?

Marked out of
Select one:
1.00
a. Total expected demand between orders.
b. Total expected demand between orders plus a cushion to reduce the chance of stockouts.
c. Expected demand until the order is filled.

d. Expected demand until the order is filled plus a cushion to reduce the chance of stockouts.

Check

Question 7 Safety stock is most typically associated with which function (purpose) of inventory?
Not complete

Select one:
Marked out of

1.00 a. Protecting against sock- outs.

b. Taking advantage of quantity discounts.

c. To decouple operations.
d. As a hedge against price increases.

Check

Question 8 Setup costs for the economic production quantity (EPQ) model are similar to which costs in the basic
Not complete EOQ model?

Marked out of
Select one:
1.00
a. Shortage
b. Carrying

c. Ordering
d. Holding

Check
Question 9 The two fundamental decisions that inventory analysts make to achieve satisfactory levels of customer
Not complete service while keeping inventory costs reasonable are:

Marked out of
Select one:
1.00
a. The timing and place to store orders
b. The timing and size of orders
c. The total cost and safety stock
d. The safety stock and ROP

Check

Question 10 Which inventory planning model does not involve calculating the quantity to order?
Not complete

Select one:
Marked out of

1.00 a. Economic Order quantity (EOQ)

b. Reorder point (ROP)
c. Single-period
d. Fixed-order-interval

Check

Question 11 Which one of the following is a true statement concerning the relationship between holding and ordering
Not complete costs in the basic EOQ model?

Marked out of
Select one:
1.00
a. The two are always equal at the EOQ.
b. Holding cost is sometimes equal to ordering cost, and sometimes greater at the EOQ.
c. Holding cost is sometimes equal to ordering cost, and sometimes less at the EOQ.

d. Holding cost is always greater than ordering cost at the EOQ.

Check

Question 12 Which one of the following is not a requirement for effective inventory management?
Not complete

Select one:
Marked out of

1.00 a. A system to keep track of levels of inventory on hand

b. Having reliable estimates of future demand requirements

c. Reasonable estimates of holding, ordering and shortage costs
d. Using an EOQ model for determining the quantity of inventory to order

Check
Question 13 Which one of the following would not be included in a list of assumptions of the basic EOQ model?
Not complete

Select one:
Marked out of

1.00 a. Lead time does not vary.

b. There are no quantity discounts.
c. Annual demand is a known quantity.
d. All are assumptions.

Check

Question 14 Work-in-process inventory is most typically associated with which function (purpose) of inventory?
Not complete

Select one:
Marked out of

1.00 a. Protecting against sock- outs.

b. Taking advantage of quantity discounts.

c. To decouple operations.
d. As a hedge against price increases.

Check

Question 15 A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be
Not complete the same as ordering cost. The production rate would be about double the usage rate.

Marked out of

1.00 Compared to the EOQ, the maximum inventory would be:

Select one:

a. approximately 70 percent higher

b. approximately 50 percent lower

c. approximately 70 percent lower

d. the same

e. approximately 30 percent higher

Check
Question 16 An operations strategy for managing inventory when there has been a dramatic increase in holding costs
Not complete but ordering costs have been significantly reduced would be:

Marked out of
Select one:
1.00
a. greatly decreased order quantities
b. slightly increased order quantities
c. unchanged order quantities

d. slightly decreased order quantities

e. greatly increased order quantities

Check

Question 17 Given the same demand, setup/ordering costs, and holding costs, the EPQ will be:
Not complete

Select one:
Marked out of

1.00 a. smaller than or equal to the EOQ.

b. greater than the EOQ.
c. greater than or equal to the EOQ.
d. smaller than the EOQ.
e. equal to the EOQ.

Check

Question 18 If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the
Correct reorder point (ROP) will be:

Mark 1.00 out of

Select one:
1.00
a. 70
b. 80
c. 130 !

d. 20

e. 50

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 19 In an A-B-C system, the typical percentage of the number of items in inventory for A items is about:
Not complete

Select one:
Marked out of

1.00 a. 20 - 30 percent
b. 15 - 20 percent
c. 70 - 80 percent
d. more than 90 percent
e. 40 - 50 percent

Check

Question 20 In a single period model, if shortage and excess costs are equal, then the optimum service level is:
Correct

Select one:
Mark 1.00 out of

1.00 a. .33
b. .67
c. none of these
d. .50 !

e. 0

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 21 In a two-bin inventory system, the amount contained in the second bin is equal to the:
Not complete

Select one:
Marked out of

1.00 a. reorder point, the amount required until an order arrives

b. amount in the first bin

c. EOQ
d. safety stock
e. optimum stocking level

Check
Question 22 In the A-B-C classification system, items which account for about 5 - 10 percent of the annual dollar
Not complete value (ADV) but 50 - 60 percent of the SKUs in inventory would be classified as:

Marked out of
Select one:
1.00
a. B items
b. A items
c. either A items or B items
d. C items
e. either B items or C items

Check

Question 23 In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of
Correct $1/unit per year will result in an EOQ of:

Mark 1.00 out of

Select one:
1.00
a. none of these

b. 400
c. square root of 200
d. 20 !

e. 200

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 24 In the basic EOQ model, annual ordering cost is equal to:
Not complete

Select one:
Marked out of

1.00 a. ordering cost multiplied by the ratio of annual demand to the EOQ
b. ordering cost multiplied by the ratio of the EOQ to annual demand
c. ordering cost multiplied by annual demand
d. the EOQ multiplied by ordering cost
e. the EOQ divided by ordering cost

Check
Question 25 In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:
Not complete

Select one:
Marked out of

1.00 a. It doubles.

b. It is half its previous amount.

c. It is four times its previous amount.
d. It increases by about 40 percent.
e. It is about 70 percent of its previous amount.

Check

Question 26 In the basic EOQ model, if annual demand is 50, holding cost is $2, and ordering cost is $15, the EOQ
Correct (rounded to the next whole number) is:

Mark 1.00 out of

Select one:
1.00
a. 20
b. 11
c. 375
d. 28 !

e. 24

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 27 Laser scanning of universal product codes at retail checkout counters provides which of the following
Not complete advantages?

Marked out of

1.00 I. increased speed and accuracy at checkout

II. continuous information on inventories
III. improved levels of customer service
Iv. elimination of periodic inventories

Select one:
a. I, II, and IV only
b. I, II, and III only
c. I, III, and IV only

d. II, III, and IV only

e. I, II, III, and IV

Check

Question 28 The goal of the basic EOQ model is to:

Not complete

Select one:
Marked out of

1.00 a. minimize the sum of ordering and holding costs

b. minimize the sum of purchasing and ordering costs
c. minimize order size
d. minimize order cost
e. minimize holding cost

Check

Question 29 The introduction of quantity discounts will cause the optimum order quantity to be:
Not complete

Select one:
Marked out of

1.00 a. always smaller

b. always greater
c. unchanged or greater
d. smaller or unchanged
e. always unchanged

Check
Question 30 The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein
Correct beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of

Mark 1.00 out of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding

1.00 costs are equal to five percent of the cost of a Stein beer case.

At what point should he reorder Stein beer?

Select one:
a. 0 cases remaining
b. 16 cases remaining
c. 20 cases remaining
d. 4 cases remaining
e. 12 cases remaining !

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 31 The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein
Correct beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of

Mark 1.00 out of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding

1.00 costs are equal to five percent of the cost of a Stein beer case.

If he were to order 16 cases of Stein beer at a time, what would be the length of an order cycle?

Select one:
a. 0.25 days

b. 4 days !

c. 3 days
d. 20 days
e. 1 day

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 32 The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein
Correct beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of

Mark 1.00 out of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding

1.00 costs are equal to five percent of the cost of a Stein beer case.

If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?

Select one:
a. 12 cases

b. 16 cases
c. 20 cases

d. 4 cases
e. 8 cases !

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 33 The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein
Correct beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of

Mark 1.00 out of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding

1.00 costs are equal to five percent of the cost of a Stein beer case.

If he has to order 16 cases of Stein beer at a time, what would be the daily total inventory costs,
EXCLUDING the cost of the beer?

Select one:
a. $2.56

b. $2.00
c. $1.28

d. $4.00
e. $3.28 !

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 34 The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein
Correct beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of

Mark 1.00 out of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding

1.00 costs are equal to five percent of the cost of a Stein beer case.

What is the economic order quantity for Stein beer?

Select one:
a. 10 cases

b. 4 cases
c. 80 cases

d. 8 cases

e. 20 cases !

Clear my choice

Check

Correct

Marks for this submission: 1.00/1.00.

Question 35 Which inventory model is most appropriate if unused or unsold items cannot be carried over to
Not complete subsequent periods?

Marked out of
Select one:
1.00
a. quantity discount

b. reorder point
c. single period

d. economic production quantity

e. economic order quantity

Check
Question 36 Which is not considered a holding cost?
Not complete

Select one:
Marked out of

1.00 a. insurance

b. warehousing costs
c. depreciation

d. stockout cost

e. opportunity cost of funds

Check

Question 37 Which of the following does not match regarding inventory counting and replenishment models?
Not complete

Select one:
Marked out of

1.00 a. Periodic counting - small retailers

b. Perpetual tracking - reorder point (ROP) model

c. Periodic counting - fixed-order-interval model

d. Two-bin system - grocery stores

e. Perpetual tracking - fixed order-quantity model

Check

Question 38 Which of the following is not a function of inventory?

Not complete

Select one:
Marked out of

1.00 a. to allow for the time while goods are transported

b. to take advantage of quantity discounts

c. to hedge against price increases

d. to prevent shortages

e. to prevent decoupling of operations

Check
Question 39 Which of the following is not an assumption of the basic EOQ model?
Not complete

Select one:
Marked out of

1.00 a. Lead time does not vary.

b. Holding costs are independent of price.

c. Only one product is involved.

d. There are no quantity discounts.

e. Each order is received in a single delivery.

Check

Question 40 Which of the following is not an assumption of the EOQ with planned shortages model?
Not complete

Select one:
Marked out of

1.00 a. All of the choices are assumptions.

b. There are no backorders.

c. Demand rate is constant.

d. Lead time is constant.

e. There are no quantity discounts.

Check

Question 41 Which of the following is not a suggestion for an inventory storage system?
Not complete

Select one:
Marked out of

1.00 a. Store obsolete items in the highest locations.

b. Have controlled access to the building.

c. Have the right level of automation.

d. Make sure the storeroom is not cluttered.

e. Store heavy or fast-moving items on the floor.

Check
Question 42 Which of the following is not included in ordering cost?
Not complete

Select one:
Marked out of

1.00 a. moving delivered goods to temporary storage

b. cost of purchases

c. time spent paying invoices

d. taking an inventory count to determine how much is needed

e. inspecting incoming goods

Check

Question 43 Which of the following is not one of the assumptions of the basic EOQ model?
Not complete

Select one:
Marked out of

1.00 a. Only one product is involved.

b. Quantity discounts are available.

c. Lead time does not vary.

d. Annual demand requirements are known.

e. Each order is received in a single delivery.

Check

Question 44 Which of the following is not true for the EPQ model?
Not complete

Select one:
Marked out of

1.00 a. Usage rate is assumed to be constant.

b. There are no ordering or setup costs.

c. The maximum inventory occurs just after production ceases.

d. Average inventory is calculated as one-half maximum inventory.

e. Production rate exceeds usage rate.

Check
Question 45 Which of the following would not generally be considered one of the functions for holding inventories?
Not complete

Select one:
Marked out of

1.00 a. smoothing seasonal production

b. protecting against stock-outs

c. decoupling internal operations

d. hedging against price increases

e. minimizing holding costs

Check

Question 46 Which of these products would be most apt to involve the use of a single period model for ordering?
Not complete

Select one:
Marked out of

1.00 a. fresh fish

b. frozen corn
c. gold coins

d. calculators
e. hammers

Check

Question 47 With an A-B-C system, an item that had a high demand quantity but a low annual dollar volume would
Not complete probably be classified as:

Marked out of
Select one:
1.00
a. none of the above

b. A

c. C
d. A or B

e. B

Check

Question 48 A lower inventory turnover ratio indicates more efficient use of inventories.
Not complete

Select one:
Marked out of

1.00 True

False

Check
Question 49 Annual ordering cost is a function of order size.
Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 50 Annual ordering cost is inversely related to order size, as the size of orders decreases the annual cost of
Not complete ordering increases.

Marked out of
Select one:
1.00
True

False

Check

Question 51 Customer service level and risk of a stockout are related.

Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 52 In fixed order-quantity, reorder point (ROP) models safety stock is held to meet anticipated demand.
Not complete

Select one:
Marked out of

1.00 True

False

Check
Question 53 In the Economic Production Quantity (EPQ) model, if usage and production/delivery rates are equal,
Not complete there will be no inventory build-up, and thus the order quantity for batches or lots cannot be calculated.

Marked out of
Select one:
1.00
True

False

Check

Question 54 In the EOQ with quantity discount model, the optimum quantity will always be found on the lowest total
Not complete cost curve.

Marked out of
Select one:
1.00
True

False

Check

Question 55 In the EOQ with quantity discounts model a graph of the total cost curves will have the same EOQ for
Not complete each curve.

Marked out of
Select one:
1.00
True

False

Check

Question 56 In the single period model, the service level is the probability that demand will not exceed the stocking
Not complete level in any period.

Marked out of
Select one:
1.00
True

False

Check
Question 57 In the single-period model, with discrete stocking levels, the service level must equal or exceed the ratio
Not complete Cs/(Cs + Ce).

Marked out of
Select one:
1.00
True

False

Check

Question 58 In the single-period model, with discrete stocking levels, when the optimum stocking level does not
Not complete coincide with a feasible stocking level, one should round down so that excess costs will be reduced.

Marked out of
Select one:
1.00
True

False

Check

Question 59 One important function of inventories in manufacturing is to decouple operations.

Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 60 Service level can be stated in terms of the lead time for an order cycle or as an annual amount.
Not complete

Select one:
Marked out of

1.00 True

False

Check
Question 61 Service level in a single period model is the ratio of shortage cost to the sum of shortage and excess
Not complete cost.

Marked out of
Select one:
1.00
True

False

Check

Question 62 Setup costs for manufacturers are similar to ordering costs.

Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 63 The average inventory level and the number of orders per year are inversely related: As one increases,
Not complete the other decreases.

Marked out of
Select one:
1.00
True

False

Check

Question 64 The basic EOQ model assumes demand varies widely throughout the year.
Not complete

Select one:
Marked out of

1.00 True

False

Check
Question 65 The EOQ approach minimizes annual ordering cost.
Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 66 The EOQ should be regarded as an approximate quantity rather than an exact quantity. Thus, rounding
Not complete the calculated value is acceptable.

Marked out of
Select one:
1.00
True

False

Check

Question 67 The reorder point (ROP) must be recomputed before each order (i.e., once every order cycle).
Not complete

Select one:
Marked out of

1.00 True

False

Check

Question 68 Warehousing, insurance, and spoilage costs are all associated with holding costs.
Not complete

Select one:
Marked out of

1.00 True

False

Check

Operations management- Class

◀ COMM 225 17-8 Taylor Jump to... Slides SPC for Students Winter 2021
▶︎