Independent Demand Inventory

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Questions Bank

The Operations Function
Operations and Supply Chain Strategy
Product Design
Process Selection
Service Delivery System Design
Process-Flow Analysis
Lean Thinking and Lean Systems
Managing Quality
Quality Control and Improvement
Forecasting
Capacity Planning
Scheduling Operations
Project Planning and Scheduling
Independent Demand Inventory
Materials Requirements Planning and ERP
Supply Chain Management
Sourcing
Global Logistics

All Questions

Question 1

Free

Multiple Choice

Of the cost elements making up total inventory cost,which is the most difficult to estimate?

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Stockout costs.

Holding costs.

Carrying costs.

Item cost.

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Question 2

Free

Multiple Choice

The carrying cost for inventory consists of which cost components?

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Capital cost, obsolescence cost, and ordering cost.

Obsolescence cost, capital cost, and stockout cost.

Obsolescence cost, storage cost, and capital cost.

Storage cost, handling cost, and obsolescence cost.

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Question 3

Free

Multiple Choice

Unlike a requirements philosophy of inventory management,a replenishment philosophy

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calls for orders based on higher-level items.

applies to raw materials inventories.

is appropriate given independent demand.

causes demand to be dependent.

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Question 4

Free

Multiple Choice

Capacity,as opposed to inventory,

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is the rate at which a stock can be depleted.

covers anticipated changes in demand or supply.

consists of resources that provide the potential to produce items.

is a stock of raw materials, work in process, or finished goods used to facilitate production or satisfy customer demands.

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Question 5

Free

Multiple Choice

Which cost is NOT part of inventory ordering costs?

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Transportation costs.

Obsolescence costs.

Setup costs.

Receiving costs.

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Question 6

Multiple Choice

Which cost defines the cost of capital?

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Item cost.

Storage cost.

Deterioration cost.

Opportunity cost of investment in inventory.

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Question 7

Multiple Choice

Which of the following statements is NOT true about managing inventory in supply chains?

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In a supply chain, a single firm typically controls all of the inventories that are required while manufacturing a product.

Coordination among supply chain partners is essential while managing inventory across the supply chain.

The total cost minimization approach can be applied while managing inventory across the supply chain.

Vendor-managed inventory is an initiative shifting responsibility for managing inventory to suppliers.

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Question 8

Multiple Choice

Given that unit cost = $25,annual carrying charge = 10%,annual demand = 4,000 units,and ordering cost = $15 per order,the EOQ is

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22 units.

155 units.

219 units.

300 units.

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Question 9

Multiple Choice

A particular brand of soap has a lead time of three weeks to reorder,a weekly standard deviation of 10 units,and a weekly average usage of 30 units.The reorder point for this soap,assuming a 95% service level (z = 1.645),is

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16.45 units.

28.50 units.

106.45 units.

118.49 units.

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Question 10

Multiple Choice

Which of the following is NOT a purpose of inventory?

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To protect against uncertainties.

To allow economic production of batches.

To provide for transit.

To decrease obsolescence.

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Question 11

Multiple Choice

A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week.What kind of system is this?

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A periodic review system.

A continuous review system.

A service level system.

An ABC inventory system.

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Question 12

Multiple Choice

Transportation cost is an example of

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item cost.

ordering cost.

carrying cost.

storage cost.

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Question 13

Multiple Choice

Independent demand inventory consists of

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inventory whose demand comes from independent suppliers.

inventory that is independent of any known rules of demand and supply.

demand that is related to the demand for another item.

inventory whose demand is determined by market conditions outside the firm.

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Question 14

Multiple Choice

Which of the following is NOT an assumption of the basic EOQ model?

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Annual demand is constant and known.

Lead time is constant and known.

No stockouts are allowed.

Quantity discounts are available.

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Question 15

Multiple Choice

Which of the following statements is true about a Q system?

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It does not have a reorder point but rather a target inventory.

The system is completely determined by the two parameters Q and R.

It does not have an EOQ because the quantity varies according to demand.

The order interval is fixed-not the order quantity.

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Question 16

Multiple Choice

A paint supplier that places orders for different colors of paint for delivery at the same time should use a

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P system.

Q system.

dependent demand inventory model.

quantity discount model.

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Question 17

Multiple Choice

ABC analysis requires that inventory be classified according to

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alphabetical order by item name.

annual dollar usage.

activity-based costs.

due date.

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Question 18

Multiple Choice

In the basic EOQ model,if the lead time doubles,the EOQ will

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decrease by half.

double.

remain the same.

increase, but not double.

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Question 19

Multiple Choice

Primary reasons to hold inventory include all of the following EXCEPT

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to achieve economies of scale.

to protect against anticipated changes in demand or supply.

to decrease inventory turnover ratio.

to provide for transit.

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Question 20

Multiple Choice

Inventory cost structures incorporate four types of costs.Which of the following is NOT one of those four?

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Crash (expedite) cost.

Item (acquisition) cost.

Order (setup) cost.

Stockout cost.

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