1.According to the worldwide firm profile, Amazon.com"s advantage in inventory monitoring originates from its almost fanatical use of economic order amount and security stock calculations.

You are watching: Which of the following is not an assumption of the economic order quantity model shown below?

False (Global firm profile, easy)

2.A major obstacle in inventory monitoring is to keep a balance between inventory investment and customer company.

True (Review, easy)

3.Which item to order and via which supplier the order need to be placed are the two basic issues in inventory monitoring.

False (Overview, moderate)

4.One function of inventory is to take benefit of quantity discounts.

True (Functions of inventory, easy)

5.Work-in-procedure inventory is devoted to maintenance, repair, and operations.

False (Functions of inventory, easy)

6.ABC analysis classifies inventoried items into three teams, usually based on annual systems or amounts offered.

False (Inventory management, easy)

7.In ABC analysis, "A" Items are the the majority of tightly regulated.

True (Inventory monitoring, moderate)

8.ABC analysis is based on the presumption that closely regulating all items is crucial to produce important inventory savings.

False (Inventory management, easy)

9.Cycle counting is an inventory manage strategy exclusively offered for cyclical items.

False (Inventory management, moderate)

10.One advantage of cycle counting is that it maintains accurate inventory records.

True (Inventory monitoring, moderate)

11.In cycle counting, the frequency of item counting and also stock confirmation typically varies from item to item depending upon the item"s classification.

True (Inventory management, moderate)

12.Retail inventory that is unaccounted for in between receipt and time of sale is recognized as shrinkage.

True (Inventory administration, moderate)

13.The demand also for automobiles would certainly be considered an independent demand also.

True (Inventory models, moderate)

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14.Insurance and taxes on inventory are part of the expenses well-known as setup or ordering prices.

False (Inventory models, easy)

15.If setup expenses are reduced by comprehensive reductions in setup time, the manufacturing order amount is additionally lessened.

True (Inventory models, and also Inventory models for independent demand, easy)

16.The EOQ model is finest suited for items whose demand also is dependent on other commodities.

False (Inventory models for independent demand also, moderate)

17.In the easy EOQ design, if yearly demand were to boost, the EOQ would certainly increase proportionately.

False (Inventory models for independent demand also, moderate)

18.At the financial order amount, holding expenses are equal to purchasing prices.

False (Inventory models for independent demand also, moderate)

19.In the simple EOQ model, if the carrying price were to double, the EOQ would certainly likewise double.

False (Inventory models for independent demand also, moderate)

20.In the production order amount (POQ) version, inventory does not arrive in a solitary minute however flows in at a steady rate, bring about a larger lot dimension than in an otherwise identical EOQ difficulty.

True (Inventory models for independent demand, moderate)

21.The reorder suggest is the inventory level at which action is taken to replenish the stocked item.

True (Inventory models for independent demand, moderate)

22.In the quantity discount version, it is possible to have actually a cost-minimizing solution wright here annual ordering costs carry out not equal yearly carrying costs.

True (Inventory models for independent demand, moderate)

23.In the quantity discount version, the cost of gaining products (product cost) is not a factor in determining lot size.

False (Inventory models for independent demand also, easy)

24.Service level is the match of the probcapability of a stockout.

True (Probabilistic models and also safety and security stock, moderate)

25.Units of safety and security stock are additions to the reorder point that permit for varicapacity in the rate of demand also, the length of lead time, or both.

True (Probabilistic models and security stock, easy)

26.Safety stock in inventory units counts just on the average demand in the time of the lead time.

False (Probabilistic models and also safety and security stock, moderate)

27.The fixed-period inventory model have the right to have a stockout during the review period and in the time of the reorder period, which is why fixed-duration models need even more safety stock than fixed-amount models.

True (Inventory models for independent demand, easy)

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MULTIPLE CHOICE

28.Which of the following statements regarding Amazon.com is false?

a.The firm was opened up by Jeff Bezos in 1995.

b.The agency was established as, and also still is, a "digital retailer" with no inventory.

c.The firm is now a world-class leader in warehome management and also automation.

d.The agency supplies both United Parcel Service and the U.S. Postal Service as shippers.

e.Amazon obtains its competitive advantage via inventory monitoring.

b (Global firm profile, moderate)

29.Which of the following is a role of inventory?

a.to decouple or separate parts of the manufacturing process

b.to decouple the firm from fluctuations in demand and provide a stock of goods that will certainly provide an option for customers

c.to take advantage of amount discounts

d.to hedge versus inflation

e.All of the over are attributes of inventory.

e (Functions of inventory, moderate)

30.Which of the adhering to would certainly not primarily be a motive for a firm to host inventories?

a.to decouple or sepaprice components of the manufacturing process

b.to provide a stock of products that will administer an option for customers

c.to take advantage of quantity discounts

d.to minimize holding costs

e.All of the above are functions of inventory.

d (Functions of inventory, moderate)

31.Which of the complying with is not one of the four main kinds of inventory?

a.raw product inventory

b.work-in-procedure inventory

c.maintenance/repair/operating supply inventory

d.safety stock inventory

e.All of these are primary kinds of inventory.

d(Functions of inventory, moderate)

32.Which of the complying with statements around ABC analysis is false?

a.ABC analysis is based on the presumption that controlling the few most essential items produces the large majority of inventory savings.

b.In ABC analysis, "A" Items are tightly managed, have actually precise records, and also obtain continuous review by significant decision devices.

c.In ABC evaluation, "C" Items have actually minimal records, regular evaluation, and simple controls.

d.ABC evaluation is based on the presumption that all items should be tightly managed to produce essential expense savings.

e.All of the over statements are true.

d (Inventory administration, moderate)

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33.All of the complying with statements about ABC evaluation are true except

a.inventory might be categorized by procedures various other than dollar volume

b.it categorizes on-hand also inventory right into 3 teams based upon annual dollar volume

c.it is an application of the Pareto principle

d.it says that all items call for the same level of control

e.it claims that tbelow are the instrumental few and also the trivial many inventory items

d (Inventory monitoring, moderate)

34.ABC analysis is based upon the principle that

a.all items in inventory should be monitored incredibly closely

b.tright here are typically a few crucial items, and many kind of items which are less critical

c.an object is crucial if its consumption is high

d.more time must be spent on class “C” items because tbelow are more of them

e.an item is important if its unit price is high

b (Inventory monitoring, moderate)

35.ABC analysis divides on-hand also inventory right into three classes, primarily based upon

a.item quality

b.unit price

c.the variety of devices on hand

d.yearly demand

e.yearly dollar volume

e (Inventory management, moderate)

36.Cycle counting

a.is a process whereby inventory records are verified once a year

b.provides a measure of inventory accuracy

c.gives a meacertain of inventory turnover

d.assumes that all inventory documents have to be verified through the exact same frequency

e.assumes that the the majority of commonly provided items need to be counted even more frequently

b(Inventory monitoring, moderate)

37.Which of the adhering to statements concerning control of service inventories is true?

a.Service inventory is a fictional principle, bereason solutions are intangible.

b.Service inventory demands no safety and security stock, because there"s no such thing as a service stockout.

c.Effective manage of all goods leaving the facility is one applicable strategy.

d.Service inventory has actually carrying costs yet not setup costs.

e.All of the over are true.

c (Inventory administration, moderate)

38.The two the majority of standard inventory concerns answered by the typical inventory design are

a.timing and cost of orders

b.amount and also cost of orders

c.timing and also quantity of orders

d.order amount and also business level

e.ordering expense and moving cost

c (Inventory models for independent demand also, moderate)

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39.Amongst the benefits of cycle counting is that it

a.makes the yearly physical inventory more acceptable to management

b.does not require the in-depth documents essential as soon as annual physical inventory is used

c.does not call for very trained people

d.allows more quick identification of errors and also consequent remedial action than is possible via annual physical inventory

e.does not need to be performed for less expensive items

d (Inventory monitoring, moderate)

40.Which of the complying with are facets of inventory holding costs?

a.housing costs

b.material handling costs

c.investment costs

d.pilferage, scrap, and obsolescence

e.All of the above are elements of inventory holding expense.

e (Inventory models, moderate)

41.Which of the complying with is not an presumption of the economic order amount model presented below?

Q* =

2 D S

H

 

a.Demand also is recognized, continuous, and independent.

b.Lead time is known and also consistent.

c.Quantity discounts are not feasible.

d.Production and usage can occur simultaneously.

e.The just variable costs are setup cost and also holding (or carrying) price.

d(Inventory models for independent demand, moderate)

42.The main function of the standard economic order quantity design presented below is

Q* =

2 D S

H

 

a.to calculate the reorder point, so that replenishments take place at the proper time

b.to minimize the sum of carrying expense and holding cost

c.to maximize the customer organization level

d.to minimize the amount of setup cost and holding cost

e.to calculate the optimum safety stock

d (Inventory models for independent demand also, moderate)

43.If the actual order quantity is the financial order quantity in a difficulty that meets the presumptions of the financial order quantity design shown listed below, the average amount of inventory on hand

Q* =

2 D S

H

 

a.is smaller the smaller sized is the holding cost per unit

b.is zero

c.is one-fifty percent of the financial order quantity

d.is affected by the amount of product cost

e.All of the over are true.

c (Inventory models for independent demand, difficult)

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44.A specific type of computer system prices $1,000, and also the yearly holding cost is 25%. Annual demand also is 10,000 units, and also the order price is $150 per order. What is the approximate economic order quantity?

a.16

b.70

c.110

d.183

e.600

c (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

45.Many inventory models attempt to minimize

a.the likelihood of a stockout

b.the variety of items ordered

c.total inventory based costs

d.the variety of orders placed

e.the safety and security stock

c (Inventory models for independent demand also, easy)

46.In the fundamental EOQ design, if the price of placing an order doubles, and all other values reprimary continuous, the EOQ will

a.rise by around 41%

b.boost by 100%

c.increase by 200%

d.increase, yet even more information is needed to say by exactly how much

e.either rise or decrease

a (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

47.In the basic EOQ design, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order amount is approximately

a.24

b.100

c.141

d.490

e.600

c (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

48.Which of the following statements about the basic EOQ model is true?

a.If the ordering price were to double, the EOQ would certainly rise.

b.If annual demand were to double, the EOQ would rise.

c.If the transferring cost were to increase, the EOQ would certainly fall.

d.If annual demand also were to double, the number of orders per year would rise.

e.All of the over statements are true.

e (Inventory models for independent demand, difficult)

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49.Which of the following statements about the standard EOQ model is false?

a.If the setup expense were to decrease, the EOQ would autumn.

b.If yearly demand also were to boost, the EOQ would certainly rise.

c.If the ordering cost were to rise, the EOQ would certainly climb.

d.If yearly demand also were to double, the EOQ would likewise double.

e.All of the above statements are true.

d (Inventory models for independent demand, moderate)

50.A product whose EOQ is 40 experiences a decrease in ordering price from $90 per order to $10. The revised EOQ is

a.three times as large

b.one-3rd as large

c.nine times as large

d.one-9th as large

e.cannot be determined

b (Inventory models for independent demand, difficult) AACSB: Analytic Skills

51.A product whose EOQ is 400 experiences a 50% rise in demand. The new EOQ is

a.unchanged

b.boosted by much less than 50%

c.boosted by 50%

d.boosted by even more than 50%

e.cannot be determined

b (Inventory models for independent demand also, difficult) AACSB: Analytic Skills

52.For a certain item, the cost-minimizing order amount acquired through the fundamental EOQ model was 200 units and also the total yearly inventory (moving and also setup) price was $600. The inventory moving cost per unit per year for this item is

a.$1.50

b.$2.00

c.$3.00

d.$150.00

e.not enough information to determine

c (Inventory models for independent demand, difficult) AACSB: Analytic Skills

53.A product has actually demand of 4000 units per year. Ordering price is $20 and holding cost is $4 per unit per year. The EOQ model is proper. The cost-minimizing solution for this product will cost

_____ per year in complete annual inventory expenses.

a.$400

b.$800

c.$1200

d.zero; this is a class C item

e.cannot be figured out bereason unit price is not known

b (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

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54.A product has demand of 4000 devices per year. Ordering cost is $20 and also holding expense is $4 per unit per year. The cost-minimizing solution for this product is to order

a.all 4000 systems at one time

b.200 units per order

c.eincredibly 20 days

d.10 times per year

e.none of the above

b (Inventory models for independent demand, moderate) AACSB: Analytic Skills

55.Which of the complying with statements regarding the reorder allude is true?

a.The reorder suggest is that quantity that triggers an activity to restock an item.

b.Tbelow is a reorder allude even if lead time and demand in the time of lead time are consistent.

c.The reorder suggest is larger than d x L if security stock is current.

d.The fixed-duration version has no reorder suggest.

e.All of the above are true.

e (Inventory models for independent demand, and Probabilistic models and also safety stock, moderate)

56.The EOQ design through quantity discounts attempts to determine

a.what is the lowest amount of inventory vital to accomplish a certain company level

b.what is the lowest purchasing price

c.whether to use fixed-quantity or fixed-period order policy

d.just how many systems must be ordered

e.what is the shortest lead time

d (Inventory models for independent demand, moderate)

57.An inventory decision ascendancy claims "as soon as the inventory level goes dvery own to 14 gearboxes, 100 gearboxes will certainly be ordered." Which of the following statements is true?

a.One hundred is the reorder allude, and also 14 is the order amount.

b.Fourteenager is the reorder allude, and also 100 is the order quantity.

c.The number 100 is a function of demand throughout lead time.

d.Fourteen is the safety stock, and also 100 is the reorder point.

e.None of the above is true.

b (Inventory models for independent demand, moderate)

58.Which of the complying with statements about the manufacturing order amount version is true?

a.It uses just to items created in the firm"s very own production departments.

b.It relaxes the presumption that all the order amount is obtained at one time.

c.It relaxes the assumption that the demand also rate is constant.

d.It minimizes the full production expenses.

e.It minimizes inventory.

b (Inventory models for independent demand, moderate)

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59.Which of these statements around the manufacturing order quantity model is false?

a.The manufacturing order amount model is appropriate once the presumptions of the standard EOQ version are met, except that receipt is noninstantaneous.

b.Because receipt is noninstantaneous, some units are provided automatically, not stored in inventory.

c.Typical inventory is much less than one-half of the production order quantity.

d.All else equal, the smaller sized the proportion of demand also rate to manufacturing price, the bigger is the production order quantity.

e.None of the over is false.

d (Inventory models for independent demand, difficult)

60.The presumptions of the manufacturing order quantity model are met in a case where annual demand is 3650 devices, setup price is $50, holding cost is $12 per unit per year, the day-to-day demand also price is 10 and the day-to-day production rate is 100. The manufacturing order quantity for this difficulty is approximately

a.139

b.174

c.184

d.365

e.548

c (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

61.A production order quantity trouble has actually day-to-day demand rate = 10 and day-to-day production price = 50. The production order quantity for this problem is around 612 units. The average inventory for this difficulty is approximately

a.61

b.245

c.300

d.306

e.490

b (Inventory models for independent demand also, moderate) AACSB: Analytic Skills

62.Which category of inventory holding costs is much better than average for rapid-adjust sectors such as Computers and cell phones?

a.real estate costs

b.product dealing with costs

c.labor cost

d.components cost

e.pilferage, scrap, and also obsolescence

e (Inventory models, moderate)

63.When quantity discounts are allowed, the cost-minimizing order quantity

a.is constantly an EOQ quantity

b.minimizes the amount of holding and ordering costs

c.minimizes the unit purchase price

d.might be a amount listed below that at which one qualifies for that price

e.minimizes the amount of holding, ordering, and also product costs

e (Inventory models for independent demand also, moderate)

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64.Which of the adhering to statements around amount discounts is false?

a.The cost-minimizing solution might or might not be wright here annual holding expenses equal yearly ordering costs.

b.In inventory monitoring, item price becomes appropriate to inventory decisions just when a amount discount is accessible.

c.If transferring costs are expressed as a portion of worth, EOQ is bigger at each lower price in the discount schedule.

d.The larger yearly demand, the less attractive a discount schedule will certainly be.

See more: Which Cranial Nerve Is Generally Thought Of As A Mixed Nerve?

e.The smaller sized the ordering cost, the much less attrenergetic a discount schedule will certainly be.

d (Inventory models for independent demand also, moderate)

65.If the traditional deviation of demand is 6 per week, demand is 50 per week, and also the desired business level is 95%, roughly what is the statistical safety and security stock?

a.8 units

b.10 units

c.16 units

d.64 units

e.cannot be established without lead time data

e (Probabilistic models through consistent lead time, moderate)

66.A particular product has actually demand also in the time of lead time of 100 units, through a conventional deviation of 25 units. What security stock (approximately) offers a 95% organization level?

a.41

b.55

c.133

d.140

e.165

a (Probabilistic models via constant lead time, moderate) AACSB: Analytic Skills

67.Demand also for dishwasher water pumps is 8 per day. The traditional deviation of demand is 3 per day, and also the order lead time is four days. The company level is 95%. What should the reorder point be?

a.about 18

b.about 24

c.about 32

d.around 38

e.even more than 40

e (Probabilistic models with constant lead time, moderate) AACSB: Analytic Skills

68.The purpose of security stock is to

a.relocation failed units via great ones

b.get rid of the opportunity of a stockout

c.get rid of the likelihood of a stockout due to erroneous inventory tally

d.manage the likelihood of a stockout as a result of the varicapacity of demand throughout lead time