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| 1 | |
The two basic questions in inventory management are how much to order and when to order. |
| | A) | True |
| | B) | False |
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| 2 | |
Using the EOQ model, if an item's holding cost increases, its order quantity will decrease. |
| | A) | True |
| | B) | False |
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| 3 | |
Use of the fixed-interval model requires having a perpetual inventory system. |
| | A) | True |
| | B) | False |
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| 4 | |
With the A-B-C approach, items which have high unit costs are classified as A items. |
| | A) | True |
| | B) | False |
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| 5 | |
When using EOQ ordering, the order quantity must be computed in every order cycle. |
| | A) | True |
| | B) | False |
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| 6 | |
Inventory might be held to take advantage of order cycles. |
| | A) | True |
| | B) | False |
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| 7 | |
The economic order quantity cannot be used when holding costs are a percentage of purchase cost. |
| | A) | True |
| | B) | False |
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| 8 | |
Companies that can successfully use the A-B-C approach can avoid using EOQ models. |
| | A) | True |
| | B) | False |
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| 9 | |
The objective of inventory management is to minimize holding costs. |
| | A) | True |
| | B) | False |
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| 10 | |
Holding and ordering costs are inversely related to each other. |
| | A) | True |
| | B) | False |
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| 11 | |
A two-bin system is essentially a simple reorder point system. |
| | A) | True |
| | B) | False |
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| 12 | |
In the basic EOQ model, annual ordering cost and annual ordering cost are equal for the optimal order quantity. |
| | A) | True |
| | B) | False |
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| 13 | |
Increasing the order quantity so that it is slightly above the EOQ would not increase the total cost by very much. |
| | A) | True |
| | B) | False |
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| 14 | |
A fixed-interval ordering system would be used for items that have independent demand. |
| | A) | True |
| | B) | False |
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| 15 | |
A store that sells daily newspapers could use the single-period model for reordering. |
| | A) | True |
| | B) | False |
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| 16 | |
Other things beings equal, an increase in lead time for inventory orders will result in an increase in the: |
| | A) | order size |
| | B) | order frequency |
| | C) | reorder point |
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| 17 | |
If average demand for an item is 21 units per day, safety stock is 4 units, and lead time is 2 days, the ROP will be: |
| | A) | 84 |
| | B) | 46 |
| | C) | 42 |
| | D) | none of these |
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| 18 | |
In an A-B-C system, B items typically represent about this percentage of items: |
| | A) | 90% |
| | B) | 75% |
| | C) | 50% |
| | D) | 30% |
| | E) | 15% |
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| 19 | |
Which model does not take into account the amount of inventory on hand? |
| | A) | FOI |
| | B) | ROP |
| | C) | EOQ |
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| 20 | |
Which product is usually bought on an ROP basis? |
| | A) | textbooks |
| | B) | wedding gifts |
| | C) | sugar |
| | D) | newspaper |
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| 21 | |
Which product is usually bought on a fixed interval basis? |
| | A) | textbooks |
| | B) | wedding gifts |
| | C) | sugar |
| | D) | brownies |
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| 22 | |
In the two-bin system, the quantity in the second bin is equal to the: |
| | A) | EOQ |
| | B) | ROP |
| | C) | FOI |
| | D) | None of these. |
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| 23 | |
Using the basic EOQ model, if the ordering cost doubles, the order quantity will be |
| | A) | double its former value |
| | B) | about 50% of its former value |
| | C) | about 71% of its former value |
| | D) | unaffected |
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| 24 | |
If a decrease in unit price causes the average demand rate to increase, which one of these would not increase? |
| | A) | the EOQ |
| | B) | lead time |
| | C) | annual holding cost |
| | D) | the ROP |
| | E) | safety stock |
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| 25 | |
Setup costs are analogous to which one of these costs? |
| | A) | shortage |
| | B) | holding |
| | C) | excess |
| | D) | ordering |
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