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Exam 12: Inventory Management

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Question 41

Multiple Choice

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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

F) B) and D)
G) A) and C)

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Question 42

Multiple Choice

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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

F) B) and D)
G) A) and D)

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Question 43

Multiple Choice

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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?

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

Which of the following can be calculated by dividing profit after taxes by total assets?

A cycle count program will usually require that Class A items be counted

The fixed-order-interval model would be most likely to be used for this situation

In the fixed-order-interval model, the order size is the same for each order.

In a single-period model, if shortage and excess costs are equal, then the optimum service level is

Which of the following is least likely to be included in order costs?

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?

Decoupling operations means to break the linkage between two sequential operations.

The single-period model can be very helpful in determining when to order.

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

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.

In a two-bin inventory system, the amount contained in the second bin is equal to the

Understocking an inventory item is a sure sign of inadequate inventory control.

The basic EOQ model ignores the purchasing cost.

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?

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