Study your flashcards anywhere!
Download the official Cram app for free >
 Shuffle
Toggle OnToggle Off
 Alphabetize
Toggle OnToggle Off
 Front First
Toggle OnToggle Off
 Both Sides
Toggle OnToggle Off
 Read
Toggle OnToggle Off
How to study your flashcards.
Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key
Up/Down arrow keys: Flip the card between the front and back.down keyup key
H key: Show hint (3rd side).h key
A key: Read text to speech.a key
119 Cards in this Set
 Front
 Back
According to the global company profile, Amazon.com advantage in inventory management comes from it's almost fanatical use of economic order quantity and safety stock calculations.

False


A major challenge and inventory management is to maintain a balance between inventory investment and customer service.

True


Which item to order and with which the part of the order should be placed are the two fundamental issues and inventory management.

False


One function of inventory is to take advantage of quantity discounts.

True


Work in process inventory is devoted to maintenance, repair, and operations.

False


ABC analysis classifies inventoried items into three groups, usually based on annual units are quantities used.

False


In ABC analysis, A items are the most tightly controlled.

True


ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

False


Cycle counting is an inventory control technique exclusively use for cyclical items.

False


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

True


In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the items classification.

True


Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.

True


The demand for automobiles would be considered an independent demands.

'true 

Insurance and taxes on inventory are part of the cost known as set up or ordering cost. 
False


If set up costs are reduced by substantial reductions and set up time the production order quantity is also reduced.

True


The EOQ model is best suited for items who's the man is dependent on other products.

False


In the simple EOQ model if any will demand work to increase, the EOQ would increase proportionately.

False


At the economic order quantity, holding costs are equal to purchasing cost.

False


In the simple EOQ model, if the carrying cost were to double the EOQ would also double.

False


In the production order quantity (PO Q) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger lot size than in an otherwise identical be okay problem.

True


The reorder point is the inventory level at which action is taken to replenish the stock item.

True


In the quantity discount model, it is possible to have a cost minimizing solution where annual ordering cost is not equal annual carrying costs.

True


In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.

false 

Servicelevel is the component of probability of a stock out.

True


Units of safety stock or additions to the reorder point that allow for variability in the rate of demands, the length of lead time, or both.

True


Safety stock and inventory systems depends only on the average demand during the lead time

False


The fixed –period Inventory model can have a stock out during the review period As well as during the reorder period Which is why fixed period Models require more safety stock than fixed quantity models.

True


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

The company was founded as, and still is, a "virtual retailer" with no inventory. Things that are true the company was opened by Jeff bezels in 1995. The company is now a world class leader in warehouse management and automation. The company uses both United Parcel Service and the US Postal Service as shippers. Amazon obtains its competitive advantage through inventory management.


Which of the following is a function of inventory?

All of the above are functions of inventory i.e. to decouple or separate parts of the production process, to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers, to take advantage of quantity discounts, two heads against inflation


Which of the following would not generally be a motive for a firm to hold inventories?

To minimize holding costs


Which of the following is not one of the four main types of inventory?

Safety stock inventory
Types of inventory are raw material, work in process, maintenance repair operating supply 

Which of the following statements about ABC analysis is false?

ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. 

All of the following statements about ABC analysis are true except…

It states that all items require the same degree of control. 

ABC analysis is based upon the principle that…

There are usually a few critical items, and many items which are less critical


ABC analysis divides on hand inventory into three classes generally based upon…

Annual dollar volume


Cycle counting… 
Provides a measure of inventory accuracy.


Which of the following statements regarding control of service inventories is true?

Effective control of all goods leaving the facility is one applicable technique.


The two most basic inventory questions answered by the typical inventory model are…

Timing and quantity of orders


Among the advantages of cycle counting is that it…

Allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory.


Which of the following are elements of inventory holding cost?

All of the above are elements of inventory holding costs i.e. housing costs, material handling costs, investment costs, pilferage scrap and obsolescence


Which of the following is not an assumption of the economic order quantity model shown below?

Production and use can occur simultaneously


The primary purpose of the basic economic order quantity model shown below is…

To minimize the sum of set up cost and holding cost


If the actual order quantity is the economic order quantity in a problem that meets the assumptions of economic order quantity model shown below, the average amount of inventory on hand…

Is one half of the economic order quantity


A certain type of computer cost $1000 and the annual holding cost is 25%. And you will demand is 10,000 units and the auto cost is $150 per order. What is the approximate economic order quantity?

110 

Most inventory models attempt to minimize…

Total inventory based cost


In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will…

Increase by about 41%


Which of the following statements about the basic EEO Q model is true?

All of the above statements are true I.e. if the ordering cost where did double, the EEO Q would rise; if annual demand worked a double, the EEO Q would increase; if the carrying costs were to increase, the EEO Q would fall; if annual demand were to double, the number of autres per year would increase.


Which of the following statements about the basic EEO Q model is false?

If any will demand were to double yolk you would also double


A product who's EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10 for order the revised EOQ is

One third as large


In the basic EEO Q model, if DE =6000 per year, S=100, H = five per unit per month, the economic order quantity is approximately…

141


Product to the EOQ is 400 experiences a 50% increase in demand. The new EEO Q is…

Increased by less than 50%


For a certain item, the cost minimizing order quantity obtained with the basic EOQ model was 200 units and the total annual inventory (carrying and set up) cost was $600. The inventory carrying cost per unit per year for this item is…

Three dollars


A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is four dollars per unit per year. The EEO Q model is appropriate. The cost minimizing solution for this product will cost "this" per year in total annual inventory cost.

$800


A product has demand of 4000 units per year. Are in cost is $20 and holding cost is four dollars per unit per year. The cost minimizing solution for this product is to order…

200 units for auto


Which of the following statements regarding the reorder point is true?

All of the above are true I e: the reorder point is that quantity that triggers an action to restock an item; there is a reorder point even if lead time and demand during lead time are constant; the reorder point is larger than D x L if safety stock is present; the fixed period Model has no reorder point


EO Q model with quantity discounts attempt to determine…

How many units should be ordered


And inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?

14 is the reorder point, and 100 is the order quantity.


Which of the following statements regarding the production order quantity model is true?

It relaxes the assumption that all the order quantity is received at one time.


Which of these statements about the production order quantity model is false?

All else equal, the smaller the ratio of the demand rate to production rate, the larger is the production order quantity.


The assumptions of the production order quantity model are met in a situation where and will demand is 3650 units, set up cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately…

184


A production order quantity problem has daily demand rate it will stand and daily production rate equals 50. The production order quantity for this problem is approximately 612 units. The average inventory for this problem is approximately…

245


Which category of inventory holding cost is much higher than average for rapid change industry such as PCS and sell phones?

Pilferage, scrap, and obsolescence


When quantity discounts are allowed, the cost minimizing order quantity…

Minimize the sum of holding ordering and product call


Which of the following statements about quantity discounts is false?

The larger annual demand, the less attractive a discount schedule will be


It's a standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock?

Cannot be determined without lead time data


A specific product has to manager and lead time of 100 units with a standard deviation of 25 units. What safety stock (approximately) provides a 95% servicelevel?

41


Demand for dishwasher Water pumps is a per day. The standard deviation of demand is three per day, and the order lead time is four days. The service level is 95% what should the reorder point Be?

More than 40


The purpose of safety stock is too…

Control the likelihood of a stock out due to the variability of demand during leadtime


The proper quantity of safety stock is typically determined by…

Setting the level of safety stock so that a given stockout risk is not exceeded


If demand is not uniform and constant, then stockout risk can be controlled by…

Adding safety stock


If daily demand is normally distributed with a mean of 15 and a standard deviation of five, and lead time is constant at four days, 90% servicelevel rover car safety stock of approximately…

13 units


If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of three days, 95% service requires a safety stock of approximately…

49 units


In a safety stock problem were both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages five days with a standard deviation of one day. The standard deviation of the man during lead time is approximately…

154 units


The fixed period Inventory model requires more safety stock than a fixed quantity models because…

A stockout can occur during the review. As well as during the lead time


A disadvantage of the fixed period Inventory system is that…

Since there is no count of inventory during the review., A stock out as possible


And advantage of the fixed. Inventory system is that…

There is no physical count of inventory items when an item is withdrawn


Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world class leader in…

Warehouse management and automation


Inventory that separates various parts of the production process performs a… Function.

Decoupling


… Inventory is material that is usually purchased, but has yet to enter the manufacturing process.

Raw material


… Is a method for dividing on hand inventory into three classifications based on annual dollar volume.

ABC analysis


… As a continuing reconciliation of inventory with inventory records.

Cycle counting


… Is the time between placement in receipt of an order.

Lead time


And an economic order quantity problem, the total annual cost curve is at its ... where: cost equal set up cost.

Minimum


For a given level of demand, annual holding cost is larger as the order quantity is…

Larger


A… Model give satisfactory answers even with substantial variations and it's parameters.

robust 

In the production order quantity model the fraction of inventory that is used immediately and not stored is represented by the ratio of…

Demand rate to the production right


… Is extra stock that is carried to serve as a buffer

Safety stock


And a quantity discount problem if the savings and product cost is smaller than the increase in the sum of set up and holding cost, the discount should be…

Rejected or refused


… Is the complement of the probability of a stock out.

Servicelevel


If a safety stock problem includes parameters for average daily demand standard deviation of demand and lead time then… Is variable and… Is constant

Demand
Lead time 

When demand is constant and leadtime is variable, safety stock computation requires three and put the value of C,…, And a standard deviation of lead time

Daily demand


Hey… System triggers inventory ordering on a uniform time frequency.

Fixed –period


Inventory recorded accuracy would be decreased by…

Increasing stockroom accessibility


Type of inventory that describes inventory that has been purchased but not processed?



Raw materials inventory Single. Inventory model not applicable for…

Furniture


System that keeps track of each with drawl or addition to inventory continuously is…

Perpetual inventory


what is the purpose of safety stock? 
To control the likelihood of a stock out due to variable demand and Or lead time 

Appropriate level of safety stock is typically determined by…

Choosing the level of safety stock that ensures a given level


Service level is the complement of the probability of a stock out.

true 

Objective of inventory management is too…

Strike a balance between inventory investment and customer service


Inventory control models assume the demand for an order is…

Either independent or dependent on the demand for other items


In the single. Inventory model the overage cost is…

Cost per unit minus salvage value


What is not holding cost

Order processing


What is not a type of inventory?

MRP


What is the concept of ABC category analysis based on?

Controlling the max amount of money with minimum effort


ABC analysis divides and organizations on hand inventory into three classes based on…

Annual dollar volume


ABC is not based on…

The presumption that all items must be tightly controlled to produce important cost savings


ABC is based on the presumption…

The controlling the few most important items produces the vast majority of inventory savings


If the actual order quantity is equal to the economic order quantity and a problem that meets the assumptions of the economic order quantity model the average amount of inventory on hand…

Is one half of the economic order quantity


What are not ordering costs?

Interest payment


What is the cost to prepare a machine or process for production?

Set up cost


What is true about the production order quantity model?

It relaxes the assumption that all the order quantity is received at one time


A statistical model applicable when product demand are any other variable is not known but can be specified by means of a probability distribution is referred to as…

Probabilistic model


What is a system for ordering items that have little or no value at the end of the sales.?

Singleperiod Inventory model


For seasonal products, the service level should be said to equal…

Shortage divided/(overage + shortage)


A system that triggers ordering on her uniform time basis is called…

fixed –period System 

What is not one of the assumptions of fixed. Systems?

Lead times are variable


Disadvantage of fixed point inventory system…

Since there is no Cal of inventory during the review., Stockout as possible


Advantage of fixed point inventory system…

There is no physical count of inventory items when an item is withdrawn
