Question 1

True or False?
In the fixed-order interval model, the size is the same for each cycle.

Accepted Answer

False. The size will vary according to demand, the only thing that is set is the time frame that the orders are made.

Question 2

True or false?
The fixed-order interval model requires a continuous monitoring of inventory levels.

Accepted Answer

False.  The fixed-order interval model requires only periodic inventory checks.

Question 3

True or false?
the single-period model can be very helpful in determining when to order.

Accepted Answer

False. The goal of the single-period model is to identify the order quantity, or stocking level, that will minimize the long-run excess and shortage costs

Question 4

True or false?
In the single period model, the service level is the probability that demand will not exceed the stocking level in any period.

Accepted Answer

True

Question 5

True or false?
The EOQ and ROP models are appropriate if unused items can be carried over and used or sold in subsequent periods.

Accepted Answer

True

Question 6

True or false?
The two basic issues in inventory are how much to order and when to order.

Accepted Answer

True

Question 7

True or false?
In the A-B-C approach, items with very high unit costs are always classified as "A" items.

Accepted Answer

False. The A-B-C approach classifies items in order of importance, A being the most important, B moderately important and C least important.

Question 8

Assumptions of the basic EOQ model

Accepted Answer

Annual demand requirements are known and constant, lead time does not vary, each order is received in a single delivery

Question 9

Dairy items, fresh fruit, and newspapers are items that

Accepted Answer

are subject to deterioration and spoilage

Question 10

In an A-B-C system, the typical percentage of the number of items in an inventory for A items is about

Accepted Answer

10%

Question 11

In the A-B-C classification system, items which account for 15% of the total dollar volume for a majority of the inventory items would be classified as:

Accepted Answer

C items

Question 12

Generally considered reasons for holding inventory

Accepted Answer

smoothing requirements on operations, decoupling internal operations, meeting anticipated demand, minimizing carrying costs

Question 13

The EOQ is most relevant for:

Accepted Answer

determining the fixed order quantities

Question 14

The goal of basic EOQ model is to:

Accepted Answer

minimize the sum of ordering and holding costs

Question 15

In the basic EOQ model, if annual demand doubles, the effect on EOQ is:

Accepted Answer

it increases by about 40%

Question 16

In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1/unit per year will result in an EOQ of

Accepted Answer

20

Question 17

Determinants of the reorder point

Accepted Answer

rate of demand, length of lead time, lead time variability, stockout risk

Question 18

If no variations in demand or lead time exist, the ROP will equal:

Accepted Answer

expected usage during lead time

Question 19

In a single period model, if shortage and excess costs are equal, then the optimum service level is

Accepted Answer

.5

Question 20

In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:

Accepted Answer

fixed order interval

Question 21

Inventory turnover

Accepted Answer

cost of goods sold/average aggregate inventory value

Question 22

weeks of supply

Accepted Answer

(average aggregate inventory value/cost of goods sold)*52 weeks

Question 23

cost of goods sold

Accepted Answer

the annual cost for a company to produce the goods or services provided to customers

Question 24

average aggregate inventory value

Accepted Answer

the total value of all items held in inventory for the firm valued at cost

Question 25

weeks of supply

Accepted Answer

used when distribution inventory is dominant, a measure of how many weeks' worth of inventory is in the system at a particular point in time

Question 26

bullwhip effect

Accepted Answer

the variability in demand is magnified as we move from the customer to the producer in the supply chain, indicates a lack of synchronization among supply chain members

Question 27

possible causes of bullwhip effect

Accepted Answer

volume and transportation discounts, promotional sales, inflated orders, long cycle times, demand forecasting

Question 28

demand side products and be categorized as:

Accepted Answer

funtional or innovative

Question 29

stable supply process

Accepted Answer

the manufacturing process and the underlying technology are mature and the supply base is well established

Question 30

evolving supply process

Accepted Answer

the manufacturing process and the underlying technology are still under early development and are rapidly changing.  the supply base may be limited in both size and experience

Question 31

Hau Lee characterizes 4 types of supply chain strategies

Accepted Answer

efficient, risk hedging, responsive, agile

operations exam 3

exam 3

Question	Answer
True or False? In the fixed-order interval model, the size is the same for each cycle.	False. The size will vary according to demand, the only thing that is set is the time frame that the orders are made.
True or false? The fixed-order interval model requires a continuous monitoring of inventory levels.	False. The fixed-order interval model requires only periodic inventory checks.
True or false? the single-period model can be very helpful in determining when to order.	False. The goal of the single-period model is to identify the order quantity, or stocking level, that will minimize the long-run excess and shortage costs
True or false? In the single period model, the service level is the probability that demand will not exceed the stocking level in any period.	True
True or false? The EOQ and ROP models are appropriate if unused items can be carried over and used or sold in subsequent periods.	True
True or false? The two basic issues in inventory are how much to order and when to order.	True
True or false? In the A-B-C approach, items with very high unit costs are always classified as "A" items.	False. The A-B-C approach classifies items in order of importance, A being the most important, B moderately important and C least important.
Assumptions of the basic EOQ model	Annual demand requirements are known and constant, lead time does not vary, each order is received in a single delivery
Dairy items, fresh fruit, and newspapers are items that	are subject to deterioration and spoilage
In an A-B-C system, the typical percentage of the number of items in an inventory for A items is about	10%
In the A-B-C classification system, items which account for 15% of the total dollar volume for a majority of the inventory items would be classified as:	C items
Generally considered reasons for holding inventory	smoothing requirements on operations, decoupling internal operations, meeting anticipated demand, minimizing carrying costs
The EOQ is most relevant for:	determining the fixed order quantities
The goal of basic EOQ model is to:	minimize the sum of ordering and holding costs
In the basic EOQ model, if annual demand doubles, the effect on EOQ is:	it increases by about 40%
In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1/unit per year will result in an EOQ of	20
Determinants of the reorder point	rate of demand, length of lead time, lead time variability, stockout risk
If no variations in demand or lead time exist, the ROP will equal:	expected usage during lead time
In a single period model, if shortage and excess costs are equal, then the optimum service level is	.5
In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:	fixed order interval
Inventory turnover	cost of goods sold/average aggregate inventory value
weeks of supply	(average aggregate inventory value/cost of goods sold)*52 weeks
cost of goods sold	the annual cost for a company to produce the goods or services provided to customers
average aggregate inventory value	the total value of all items held in inventory for the firm valued at cost
weeks of supply	used when distribution inventory is dominant, a measure of how many weeks' worth of inventory is in the system at a particular point in time
bullwhip effect	the variability in demand is magnified as we move from the customer to the producer in the supply chain, indicates a lack of synchronization among supply chain members
possible causes of bullwhip effect	volume and transportation discounts, promotional sales, inflated orders, long cycle times, demand forecasting
demand side products and be categorized as:	funtional or innovative
stable supply process	the manufacturing process and the underlying technology are mature and the supply base is well established
evolving supply process	the manufacturing process and the underlying technology are still under early development and are rapidly changing. the supply base may be limited in both size and experience
Hau Lee characterizes 4 types of supply chain strategies	efficient, risk hedging, responsive, agile

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