SCM 411 FINAL EXAM QUESTIONS WITH
CORRECT ANSWERS
Inventory carried for the purpose of satisfying demand that exceeds the amount
forecasted for a given period is
A) cycle inventory.
B) demand inventory.
C) safety inventory.
D) security inventory. - ANSWER C) safety inventory.
Safety inventory is carried because
A) demand forecasts are accurate.
B) demand forecasts are uncertain.
C) adequate supplies are available.
D) excess product was manufactured. - ANSWER B) demand forecasts are
uncertain
The trade-off that a supply chain manager must consider when planning safety
inventory is
A) increasing product availability versus increasing inventory holding costs.
B) decreasing product availability versus decreasing inventory holding costs.
C) increasing product availability versus raising the level of safety inventory.
D) decreasing product availability versus decreasing the level of safety
inventory. - ANSWER A) increasing product availability versus increasing
inventory holding costs
The issue of product availability and the level of safety inventory is particularly
significant in industries where
A) product life cycles are short and demand is stable.
B) product life cycles are short and demand is very volatile.
C) product life cycles are long and demand is stable.
D) product life cycles are long and demand is very volatile. - ANSWER B) product
life cycles are short and demand is very volatile.
The ability to provide a high level of product availability to customers while
carrying very low levels of safety inventory in its supply chain has been a key to
success at which company?
A) Compaq
B) Hewlett-Packard
C) Dell
D) Packard-Bell - ANSWER C) Dell
,The fraction of product demand that is satisfied from product in inventory is the
A) customer fill rate.
B) product fill rate.
C) order fill rate.
D) cycle service level (CSL). - ANSWER B) product fill rate.
The fraction of replenishment cycles that end with all the customer demand
being met is the
A) customer fill rate.
B) product fill rate.
C) order fill rate.
D) cycle service level (CSL). - ANSWER D) cycle service level (CSL).
The distinction between product fill rate and order fill rate is:
A) not significant in a single product situation.
B) significant in a single product situation.
C) not significant when a firm is selling multiple products.
D) significant when a firm is selling multiple products. - ANSWER A) not
significant in a single product situation.
A company that tracks inventory and places an order for a lot size Q when the
inventory declines to the reorder point (ROP) is using
A) continuous review.
B) daily review.
C) occasional review.
D) periodic review. - ANSWER A) continuous review.
A company that checks inventory status at regular periodic intervals and places
an order to raise the inventory level to a specified threshold is using
A) continuous review.
B) daily review.
C) occasional review.
D) periodic review. - ANSWER D) periodic review.
As the safety inventory is increased,
A) fill rate increases and cycle service level decreases.
B) fill rate decreases and cycle service level increases.
C) both fill rate and cycle service level increase.
D) both fill rate and cycle service level decrease. - ANSWER C) both fill rate and
cycle service level increase.
For the same safety inventory, an increase in lot size
A) decreases the fill rate but not the cycle service level.
B) increases the fill rate but not the cycle service level.
C) decreases both the fill rate and the cycle service level.
, D) increases both the fill rate and the cycle service level. - ANSWER B)
increases the fill rate but not the cycle service level.
The required safety inventory
A) grows rapidly with a decrease in the desired product availability.
B) grows rapidly with an increase in the desired product availability.
C) decreases with an increase in the desired product availability.
D) remains stable with an increase in the desired product availability. - ANSWER
B) grows rapidly with an increase in the desired product availability.
The required safety inventory
A) increases with an increase in the lead time and the standard deviation of
periodic demand.
B) decreases with an increase in the lead time and the standard deviation of
periodic demand.
C) remains stable with an increase in the lead time and the standard deviation of
periodic demand.
D) increases with a decrease in the lead time and the standard deviation of
periodic demand. - ANSWER D) increases with a decrease in the lead time and
the standard deviation of periodic demand.
A goal of any supply chain manager is to
A) increase the level of safety inventory required in a way that does not
adversely affect product availability.
B) increase the level of safety inventory required regardless of the effect on
product availability.
C) reduce the level of safety inventory required regardless of the effect on
product availability.
D) reduce the level of safety inventory required in a way that does not adversely
affect product availability. - ANSWER D) reduce the level of safety inventory
required in a way that does not adversely affect product availability.
As the uncertainty of supply or demand ________, the required level of safety
inventories ________.
A) grows, increases
B) increases, decreases
C) decreases, grows
D) decreases, increases - ANSWER A) grows, increases
The ________ is the average units of demand that are not satisfied from inventory
in stock per replenishment cycle.
A) ROP
B) ESC
C) EOQ
D) CSL - ANSWER B) ESC
CORRECT ANSWERS
Inventory carried for the purpose of satisfying demand that exceeds the amount
forecasted for a given period is
A) cycle inventory.
B) demand inventory.
C) safety inventory.
D) security inventory. - ANSWER C) safety inventory.
Safety inventory is carried because
A) demand forecasts are accurate.
B) demand forecasts are uncertain.
C) adequate supplies are available.
D) excess product was manufactured. - ANSWER B) demand forecasts are
uncertain
The trade-off that a supply chain manager must consider when planning safety
inventory is
A) increasing product availability versus increasing inventory holding costs.
B) decreasing product availability versus decreasing inventory holding costs.
C) increasing product availability versus raising the level of safety inventory.
D) decreasing product availability versus decreasing the level of safety
inventory. - ANSWER A) increasing product availability versus increasing
inventory holding costs
The issue of product availability and the level of safety inventory is particularly
significant in industries where
A) product life cycles are short and demand is stable.
B) product life cycles are short and demand is very volatile.
C) product life cycles are long and demand is stable.
D) product life cycles are long and demand is very volatile. - ANSWER B) product
life cycles are short and demand is very volatile.
The ability to provide a high level of product availability to customers while
carrying very low levels of safety inventory in its supply chain has been a key to
success at which company?
A) Compaq
B) Hewlett-Packard
C) Dell
D) Packard-Bell - ANSWER C) Dell
,The fraction of product demand that is satisfied from product in inventory is the
A) customer fill rate.
B) product fill rate.
C) order fill rate.
D) cycle service level (CSL). - ANSWER B) product fill rate.
The fraction of replenishment cycles that end with all the customer demand
being met is the
A) customer fill rate.
B) product fill rate.
C) order fill rate.
D) cycle service level (CSL). - ANSWER D) cycle service level (CSL).
The distinction between product fill rate and order fill rate is:
A) not significant in a single product situation.
B) significant in a single product situation.
C) not significant when a firm is selling multiple products.
D) significant when a firm is selling multiple products. - ANSWER A) not
significant in a single product situation.
A company that tracks inventory and places an order for a lot size Q when the
inventory declines to the reorder point (ROP) is using
A) continuous review.
B) daily review.
C) occasional review.
D) periodic review. - ANSWER A) continuous review.
A company that checks inventory status at regular periodic intervals and places
an order to raise the inventory level to a specified threshold is using
A) continuous review.
B) daily review.
C) occasional review.
D) periodic review. - ANSWER D) periodic review.
As the safety inventory is increased,
A) fill rate increases and cycle service level decreases.
B) fill rate decreases and cycle service level increases.
C) both fill rate and cycle service level increase.
D) both fill rate and cycle service level decrease. - ANSWER C) both fill rate and
cycle service level increase.
For the same safety inventory, an increase in lot size
A) decreases the fill rate but not the cycle service level.
B) increases the fill rate but not the cycle service level.
C) decreases both the fill rate and the cycle service level.
, D) increases both the fill rate and the cycle service level. - ANSWER B)
increases the fill rate but not the cycle service level.
The required safety inventory
A) grows rapidly with a decrease in the desired product availability.
B) grows rapidly with an increase in the desired product availability.
C) decreases with an increase in the desired product availability.
D) remains stable with an increase in the desired product availability. - ANSWER
B) grows rapidly with an increase in the desired product availability.
The required safety inventory
A) increases with an increase in the lead time and the standard deviation of
periodic demand.
B) decreases with an increase in the lead time and the standard deviation of
periodic demand.
C) remains stable with an increase in the lead time and the standard deviation of
periodic demand.
D) increases with a decrease in the lead time and the standard deviation of
periodic demand. - ANSWER D) increases with a decrease in the lead time and
the standard deviation of periodic demand.
A goal of any supply chain manager is to
A) increase the level of safety inventory required in a way that does not
adversely affect product availability.
B) increase the level of safety inventory required regardless of the effect on
product availability.
C) reduce the level of safety inventory required regardless of the effect on
product availability.
D) reduce the level of safety inventory required in a way that does not adversely
affect product availability. - ANSWER D) reduce the level of safety inventory
required in a way that does not adversely affect product availability.
As the uncertainty of supply or demand ________, the required level of safety
inventories ________.
A) grows, increases
B) increases, decreases
C) decreases, grows
D) decreases, increases - ANSWER A) grows, increases
The ________ is the average units of demand that are not satisfied from inventory
in stock per replenishment cycle.
A) ROP
B) ESC
C) EOQ
D) CSL - ANSWER B) ESC
