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Exam 13: Inventory Management

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Question 31

Multiple Choice

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In the single-period model, if excess cost is double shortage cost, the approximate stockout risk, assuming an optimum service level, is ___ percent.

A) 100
B) 67
C) 50
D) 33
E) 5

F) B) and C)
G) A) and E)

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Question 32

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A retail store that carries twice the inventory as its competitor will provide twice the customer service level.

A) True
B) False

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Question 33

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For the economic order quantity, what is the reorder point?

For the economic order quantity, what is the average inventory level?

In the single-period model, the service level is the probability that demand will not exceed the stocking level in any period.

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:

If he were to order 16 cases of Stein beer at a time, what would be the length of an order cycle?

Given the following information: Order quantity = 300;

ROP models indicate to managers the time between orders.

Interest, insurance, and opportunity costs are all associated with holding costs.

Monitoring inventory turns over time can be used as a measure of performance.

If the order size was 1,000 kilograms of resin, what would be the average inventory level?

Quantity discounts are generally given for large number of orders.

When to order can be calculated by the ROP and expressed as a quantity.

A non-linear cost related to order size is the cost of:

In the EOQ formula, holding costs under 10% are expressed as percentages, above 10% are expressed as annual unit costs.

The rate of demand is an important factor in determining the ROP.

In the fixed-order interval model, the order size is the same for each order.

Suppose that usage of cooking oil at Harry's Fish Fry is normally distributed with an average of 15 gallons/day and a standard deviation of two gallons/day.Harry has just fired the manager and taken over operating the restaurant himself.Harry has asked you to help him decide how to reorder cooking oil in order to achieve a service level which is seven times the risk of stockout (7/8).Lead time is eight days.Assume that cooking oil can be ordered as needed.

EOQ inventory models are basically concerned with the timing of orders.