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Commerce and BusinessbackBusiness StatisticsbackOperations ManagementbackManaging Operations AcrossbackPractice Set 2468back

Extension: A Supplement: Quality Improvement Tools

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Question 1
Free
Multiple Choice

Safety stock exists for which of the following reasons?

Choose correct answer/s
A

To allow less expensive purchases by buying more.

B

To allow for transportation time.

C

To provide protection against the uncertainties of supply and demand.

D

None of these selections.

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Question 2
Free
Multiple Choice

Which of the following is NOT a role of inventory?

Choose correct answer/s
A

Increasing quality of finished goods

B

Balancing supply and demand

C

Buffering uncertainty in supply or demand

D

Enabling geographical specialization

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Question 3
Free
Multiple Choice

A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory?

Choose correct answer/s
A

Raw material

B

Work-in-process

C

Finished goods

D

Maintenance, repair, and operating supplies (MRO)

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Question 4
Free
Multiple Choice

Ball Corporation sells aluminum cans to Anheuser-Busch to use in making six-packs of Budweiser.Anheuser-Busch has a warehouse located at its plant in St.Louis which contains boxes of empty cans received from Ball.From Anheuser-Busch's perspective, the cans in this warehouse represent:

Choose correct answer/s
A

Raw materials and components inventory.

B

Work in process inventory.

C

Finished goods inventory.

D

MRO inventory.

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Question 5
Free
Multiple Choice

Taxes and insurance costs are an example of which of the following costs?

Choose correct answer/s
A

Ordering cost.

B

Governmental costs.

C

Carrying (or holding) costs.

D

None of these selections.

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Question 6
Multiple Choice

John Jones of Jones Corporation determined that the cost related to processing an invoice from a supplier was approximately $100 per invoice.This cost is an example of:

Choose correct answer/s
A
Inventory holding (or carrying) cost.
B
Inventory investment.
C
Wasted expense.
D
Order cost.
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Question 7
Multiple Choice

Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000.Johnson has determined inventory carrying cost to be 25 percent.Johnson's inventory carrying cost was:

Choose correct answer/s
A
$250,000.
B
$275,000.
C
$300,000.
D
$500,000.
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Question 8
Multiple Choice

Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20.What is the annual inventory turnover?

Choose correct answer/s
A
10
B
9
C
0.75
D
15
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Question 9
Multiple Choice

If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are $50,000 per day, what is the days of supply?

Choose correct answer/s
A
28 days
B
70 days
C
60 days
D
32 days
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Question 10
Multiple Choice

Natalie's Cabinets makes cabinets at an average cost of $2,000.Last year, Natalie sold 5,000 units of the cabinets and had an annual turnover rate of 4 times.Natalie has estimated her inventory carrying cost to be 25 percent.What was Natalie's annual inventory carrying cost?

Choose correct answer/s
A
$625,000
B
$250,000
C
$312,500
D
$125,000
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Question 11
Multiple Choice

Next year a tire company wants to have an inventory turnover rate of 22 times per year.To achieve this turnover rate, what should be the average number of days of supply?

Choose correct answer/s
A
16.6 days
B
36 days
C
0.6 days
D
22 days
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Question 12
Multiple Choice

Independent demand inventory models can be used to determine:

Choose correct answer/s
A
When to buy and how much to buy.
B
Help determine safety stock levels.
C
Stock levels for regular and one-time buys.
D
All of these selections.
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Question 13
Multiple Choice

Jones Manufacturing Inc.purchases a component from a Chilean supplier.The demand for that component is exactly 70 units each day.The company is open for business 250 days each year.When the company reorders the product, the lead time from the supplier is exactly 10 days.The product costs $14.00.The company determined that its inventory carrying cost is 20 percent.The company's order cost is $30.00.If the company decides to order 1,750 units each time it places an order, what will be the total annual cost of this policy? (Do not include the product cost in your answer.)

Choose correct answer/s
A
$1,500
B
$2,400
C
$2,750
D
$3,400
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Question 14
Multiple Choice

University Book Store buys women's polo T-shirts from a supplier according to the price schedule shown below.The store sells 500,000 T-shirts each year.The annual carrying cost of T-shirts is 25 percent, and the ordering cost is $40. image What order quantity would give the Book Store the lowest total acquisition cost? (Due to possible differences in rounding, choose the closest answer.)

Choose correct answer/s
A
2,139
B
2,237
C
2,500
D
2,614
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Question 15
Multiple Choice

University Book Store buys women's polo T-shirts from a supplier according to the price schedule shown below.The store sells 500,000 T-shirts each year.The annual carrying cost of T-shirts is 25 percent, and the ordering cost is $40. image The lowest total annual acquisition cost for Book Store quantity is closest to (Due to possible differences in rounding, choose the closest answer.):

Choose correct answer/s
A
$16,018,000
B
$16,018,708
C
$17,518,707
D
$16,258,000
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Question 16
Multiple Choice

Alpha Company places 10 orders per year with its supplier.Each order is for an amount exactly equal to the EOQ.Alpha's order cost has been determined to be $50 per order.Alpha carries no safety stock at all.What is Alpha's annual inventory carrying cost?

Choose correct answer/s
A
Cannot be determined without further information
B
$50
C
$250
D
$500
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Question 17
Multiple Choice

Alpha Company places 10 orders per year with its supplier.Each order is for an amount exactly equal to the EOQ.Alpha has determined its annual inventory carrying cost is $2,000.Alpha carries no safety stock at all.What is Alpha's order cost per order?

Choose correct answer/s
A
Cannot be determined without further information
B
$2,000
C
$200
D
$1500
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Question 18
Multiple Choice

Jones Company has calculated that the EOQ for a particular item is 1,000 units.However, Jones does not have enough capital to order that many units each time, so it only orders 250 units at a time.This will result in:

Choose correct answer/s
A
Higher annual inventory carrying cost than ordering the EOQ quantity.
B
Lower annual inventory carrying cost than ordering the EOQ quantity.
C
Lower annual ordering cost than ordering the EOQ quantity.
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Question 19
Multiple Choice

Blue Star Co.has been using the production order quantity inventory model.If annual demand, daily demand, and the production rate increase to four times their original amounts, which of the following is/are possible consequence(s)?

Choose correct answer/s
A
The order quantity will double.
B
The order quantity will increase by four times.
C
The order quantity will be cut in half.
D
There is no impact on order quantity.
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Question 20
Multiple Choice

Bryson Carpet Mills produces a variety of different carpets.Changing from production of one carpet to another involves a setup cost of $500.One particular carpet costs $8/yard to produce.Annual demand for this style is 50,000 yards.Bryson Mills produces carpet 200 days per year.The production process is most efficient when 2,000 yards/day are produced.Inventory carrying cost is estimated at 20 percent annually.What should be the production order quantity?

Choose correct answer/s
A
4,675 yards
B
5,976 yards
C
8,750 yards
D
2,500 yards
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