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Multiple Choice Quiz
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1
Which of the following is not a reason for carrying inventory?
A)to maintain independence of operations
B)to take advantage of economic purchase-order size
C)to make the system less productive
D)to meet variation in product demand
E)to allow flexibility in production scheduling
2
Counting items to ensure an order is correct is an example of:
A)setup cost
B)ordering cost
C)carrying cost
D)stockout cost
E)holding cost
3
Independent demand is:
A)inventory whose demand comes from independent suppliers
B)inventory that is independent of any known rules of demand and supply
C)demand that is related to the demand for another item
D)demand determined by the marketplace that requires forecasting
E)none of the above
4
The basic difference between Periodic systems (P-model) and Fixed-order quantity systems (Q-model) is:
A)Q models are event triggered while P models are time triggered
B)Q models are time triggered while P models are event triggered
C)P models favor more expensive items
D)P model is more appropriate for important items such as critical repair parts
E)None of the above
5
Which of the following is not an assumption of the basic economic-order quantity model?
A)annual demand is constant and known
B)lead time is constant
C)ordering or setup costs are constant
D)quantity discounts are available
E)no backorders are allowed
6
In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:
A)it doubles
B)it is half its previous amount
C)it is about 70% of its previous amount
D)decreases by a factor of 2
E)it increases by about 40%
7
Which of the following statements is true about the Fixed-order quantity system?
A)It does not have a reorder point but rather a target inventory.
B)The system is completely determined by the two parameters, Q and R.
C)It does not have an EOQ, since the quantity varies according to demand.
D)The order interval is fixed not the order quantity.
E)None of the above is true.
8
ABC analysis typically requires that inventory be classified according to:
A)alphabetical order by item name
B)annual dollar volume
C)alphabetical order by supplier name
D)due date
E)none of the above
9
In the basic Q model, if the lead time doubles, the EOQ will:
A)decrease by half
B)double
C)remain the same
D)increase, but not double
E)none of the above
10
Three simple inventory systems often used in practice are:
A)Optional replenishment or min/max system
B)One-bin system
C)Two-bin system
D)ABC inventory classification system
E)A, B, and C
11
Cycle counting of inventory is most common for the following reasons except:
A)It is the appointed time of the year
B)Records show inventory is low or zero
C)Records show inventory but a backorder was written
D)Some inventory is very valuable or important
E)None of the above





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