Chapter 13 – Inventory Management
58. Quantity discounts are generally given for large number of orders.
59. The larger the number of orders placed, the larger the average level of inventory.
60. Which of the following is not one of the assumptions of the basic EOQ model?
Chapter 13 – Inventory Management
61. Which of the following interactions with vendors would potentially lead to inventory
reductions?
62. A non-linear cost related to order size is the cost of:
Chapter 13 – Inventory Management
63. In a two-bin inventory system, the amount contained in the second bin is equal to the:
64. When carrying costs are stated as a percentage of unit price, the minimum points on the
total cost curves:
Chapter 13 – Inventory Management
65. Dairy items, fresh fruit and newspapers are items that:
66. Which of the following is least likely to be included in order costs?
Chapter 13 – Inventory Management
67. In an A-B-C system, the typical percentage of the number of items in inventory for A
items is about:
68. In the A-B-C classification system, items which account for fifteen percent of the total
dollar-volume for a majority of the inventory items would be classified as:
Chapter 13 – Inventory Management
69. In the A-B-C classification system, items which account for sixty percent of the total
dollar-volume for few inventory items would be classified as:
70. The purpose of “cycle counting” is to:
Chapter 13 – Inventory Management
71. The EOQ model is most relevant for which one of the following?
72. Which is not a true assumption in the EOQ model?
Chapter 13 – Inventory Management
73. In a supermarket, a vendor’s restocking the shelves every Monday morning is an example
of:
74. A cycle count program will usually require that ‘A’ items be counted:
Chapter 13 – Inventory Management
75. A risk avoider would want ______ safety stock.
76. In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:
Chapter 13 – Inventory Management
77. In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will:
78. In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a
holding cost of $1 per unit per year will result in an EOQ of:
Chapter 13 – Inventory Management
79. In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month,
EOQ is:
80. In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is
$15, EOQ is approximately:
Chapter 13 – Inventory Management
81. Which of the following is not true for Economic Production Quantity model?
82. Given the same demand, setup/ordering costs, and carrying costs, the EOQ calculated
using incremental replenishment will be ____________ if instantaneous replenishment was
assumed:
Chapter 13 – Inventory Management
83. The introduction of quantity discounts will cause the optimum order quantity to be:
84. A fill rate is the percentage of _____ filled by stock on hand.
Chapter 13 – Inventory Management
85. In the quantity discount model, with carrying cost stated as a percentage of unit purchase
price, in order for the EOQ of the lowest curve to be optimum, it must:
86. Which one of the following is not generally a determinant of the reorder point?
Chapter 13 – Inventory Management
87. If no variations in demand or lead time exist, the ROP will equal:
88. If average demand for an inventory item is 200 units per day, lead time is three days, and
safety stock is 100 units, the reorder point is:
Chapter 13 – Inventory Management
89. Which one of the following is implied by a “lead time” service level of 95 percent?
90. Which one of the following is implied by an “annual” service level of 95 percent?
Chapter 13 – Inventory Management
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91. Daily usage is exactly 60 gallons per day. Lead time is normally distributed with a mean
of 10 days and a standard deviation of 2 days. What is the standard deviation of demand
during lead time?
92. Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of
10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of
demand during lead time?
Chapter 13 – Inventory Management
93. All of the following are possible reasons for using the fixed order interval model except:
94. Which of these products would be most apt to involve the use of a single-period model?
Chapter 13 – Inventory Management
95. In a single-period model, if shortage and excess costs are equal, then the optimum service
level is:
96. In a single-period model, if shortage cost is four times excess cost, then the optimum
service level is ___ percent.
Chapter 13 – Inventory Management
97. In the single-period model, if excess cost is double shortage cost, the approximate
stockout risk, assuming an optimum service level, is ___ percent.
98. If, in a single-period inventory situation, the probabilities of demand being 1, 2, 3, or 4
units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of
selling both of them?