MultipleChoice Cht 12 Inventory

8/11/2019 MultipleChoice Cht 12 Inventory

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Exercises on Inventory ConceptsChapter 12, MGMT4102, J. Wang

Name ________________________1. Inventory is necessary for a business because

a. it plays a role of a buffer to provide better customer service.b. it is a smart way to spend money.c. it is like saving money in the bank..

2. A business does not want to have too much of inventory becausea. inventory isolates a work unit from the others.b. the possibility of supply shortage is small.c. it takes cash to have the inventory.

3. he !"# model determines the best time to make an order.a. rue b. $alse

%. he !"# model determines the best order &uantity per order.a. rue b. $alse

'. Inventory level( which is measured by average inventory( is affected by number of units in anorder )order &uantity*.

a. rue b. $alse

+. ,ow long the lead time is does not affect the optimal order &uantity.a. rue b. $alse

-. If annual demand is (/// units( ordering cost is 0'/ per order( holding cost is 01/ per unit

per year( then the optimal order &uantity # isa. 2'/ units b. 3// units c. %// units

. If annual demand is 2(/// units( order setup cost is 0'/ per order( holding cost is 0' per unitper month( then the optimal order &uantity # is

a. 2// units b. '-.- units c. 3// units

. If there are // different inventoried items( then they must be dealt with individually when the!"# model is used to control the inventory.

a. rue b. $alse

1/. If #1'/ by the !"# model( then we should order less than 1'/ units in an order to reducethe total inventory cost.

a. rue b. $alse

11. he best order &uantity will go _____ if the unit ordering cost goes up.a. up b. down

12. he best order &uantity will go _____ if the unit holding cost per year goes up.a. up b. down


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13. he total annual purchase cost )cost of goods* does not change with different order &uantities(as far as there is not volume discount.

a. rue b. $alse

1%. If volume discount is offered by the supplier( the purchase cost )cost of goods* must be takeninto account when considering the best order &uantity.

a. rue b. $alse

1'. !4tra units held in inventory to reduce the risk of stockout are calleda. 5"6 b. safety stock c. back order d. 7I

1+. If we set a higher safety stock( then the average inventory level would be higher.

a. rue b. $alse

1-. If ordered items arrive in one batch( then the average inventory is __________.a. # 8 )safety stock*. b. #92 8 )safety stock*

c. #92 8 )safety stock*92

1. If ordered items are delivered continuously as in !6# model( then the average inventory is___________ .

a. # 8 )safety stock*. b. #92 8 )safety stock*c. #92 8 )safety stock*92 d. Ima48 )safety stock*e. Ima492 8 )safety stock* f. Ima492 8 )safety stock*92

1. In !6# model( Ima4is _________ order &uantity #.a. e&ual to b. lower than c. higher than

2/. he higher the order &uantity is( the higher the re:order point )5"6* is.a. rue b. $alse

21. If a manager is &uite uncertain about the daily demand of an item( he tends to set a _________safety stock for that item.

a. small b. large

22. $or am item that is crucial for the sales of a store( the manager does not want to havestockout on it. ;o( the manager tends to set a ________ safety stock for that item.

a. small b. large23. 7oe paid totally 0'+ to purchase five s online( in which each


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a. ;9, cost b. 5ental for storage spacec. abor cost to prepare orders

2+. ?hich of the following is N" inventory holding cost@a. ;9, cost b. 5ental for storage spacec. Insurance for inventoried items d. "bsolescence of inventoried items

2-. ;etup cost refers to the cost and time involved in changing over a machine for preparing toproduce a different component.

a rue b. $alse

2. ?hen the lot siBe changes( the ordering cost or setup cost ___________.a. would change b. would not change

2. According to the !6# formula( # will _________ if setup time is reduced.a. get smaller b. get larger c. remain unchanged

3/. If !6# # 2// units( then we say that the ___________ is 2// units.a. order &uantity b. batch siBec. Coth a and b.

31.


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c. Coth a and b.

3-. AC< analysis is a method for ____________________.a. determining the best order &uantity.b. determining the optimal inventory level.c. classifying the inventoried items into A( C( < classes for efficient inventory management.

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MultipleChoice Cht 12 Inventory