OPERATIONS MANAGEMENT Inventory Management - MGMT 2500 Humber Lakeshore Chapter 12 Exam Questions And Answers Practice Questions with Solutions Newest | Already Graded A+

OPERATIONS MANAGEMENT Inventory Management - MGMT 2500 Humber Lakeshore Chapter 12 Exam Questions And Answers Practice Questions with Solutions Newest | Already Graded A+ According to the global company profile, A's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations. - Answer- False A major challenge in inventory management is to maintain a balance between inventory investment and customer service. - Answer- True Work-in-process inventory is devoted to maintenance, repair, and operations. - Answer- False ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used. - Answer- False In ABC analysis, "A" Items are the most tightly controlled. - Answer- True ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings. - Answer- False Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management. - Answer- False One function of inventory is to take advantage of quantity discounts. - Answer- True Cycle counting is an inventory control technique exclusively used for cyclical items. - Answer- False One advantage of cycle counting is that it maintains accurate inventory records. - Answer- True In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification. - Answer- True Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage. - Answer- True The demand for automobiles would be considered an independent demand. - Answer- True Insurance and taxes on inventory are part of the costs known as setup or ordering costs. - Answer- False If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced. - Answer- True The EOQ model is best suited for items whose demand is dependent on other products. - Answer- False In the simple EOQ model, if annual demand were to increase, the EOQ would increase Proportionately. - Answer- False At the economic order quantity, holding costs are equal to purchasing costs. - Answer- False In the simple EOQ model, if the carrying cost were to double, the EOQ would also double. - Answer- False In the production order quantity (POQ) 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 EOQ problem. - Answer- True The reorder point is the inventory level at which action is taken to replenish the stocked item. - Answer- True In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs. - Answer- True In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size. - Answer- False Service level is the complement of the probability of a stock out. - Answer- True Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both. - Answer- True Safety stock in inventory systems depends only on the average demand during the lead time. - Answer- 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. - Answer- True Which of the following statements regarding A is false? - Answer- The Company was founded as, and still is, a "virtual retailer" with no inventory. Which of the following is a function of inventory? - Answer- All of the above are functions of inventory. Which of the following would not generally be a motive for a firm to hold inventories? - Answer- to minimize holding costs Which of the following is not one of the four main types of inventory? - Answer- safety stock inventory Which of the following statements about ABC analysis is false? - Answer- 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 - Answer- it states that all items require the same degree of control ABC analysis is based upon the principle that - Answer- there are usually a few critical items, and many items that are less critical ABC analysis divides on-hand inventory into three classes, generally based upon - Answer- annual dollar volume Cycle counting - Answer- provides a measure of inventory accuracy Which of the following statements regarding control of service inventories is true? - Answer- 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 - Answer- Timing and Quantity of orders Among the advantages of cycle counting is that it - Answer- 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 costs? - Answer- All of the above are elements of inventory holding cost. Which of the following is not an assumption of the economic order quantity model shown below? Q= 2DS/H - Answer- Production and use can occur simultaneously. The primary purpose of the basic economic order quantity model shown below is Q=2DS/H - Answer- to minimize the sum of setup cost and holding cost If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand Q=2DS/H - Answer- is one-half of the economic order quantity