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1.

1 point

Periodic review inventory systems

are less subject to stockouts than corresponding continuous review systems

require larger safety stock levels than corresponding continuous review systems.

have constant order quantities

make the coordination of orders for multiple products more difficult

2.

1 point

Inventory position is defined as

the amount of inventory on hand in excess of expected demand

the amount of inventory on hand

the amount of inventory on hand plus the amount of inventory on order

None of the alternatives is correct

3.

1 point

Inventory models in which the rate of demand is constant are called

fixed models

deterministic models

JIT models

requirement models

4.

1 point

For inventory systems with constant demand and a fixed lead time,

the reorder point = lead time demand

the reorder point > lead time demand.

the reorder point < lead time demand

the reorder point is unrelated to lead time demand

5.

1 point

Annual purchase cost is included in the total cost in

the EOQ model.

the economic production lot size model.

the quantity discount omdel.

all inventory models.

6.

1 point

The maximum inventory with backorders is

Q

Q-S

S

(Q-S)/2

7.

1 point

The economic production lot size model is appropriate when

demand exceeds the production rate.

there is a constant supply rate for every period, without pause.

ordering cost is equivalent to the production setup cost

All of the alternatives are correct.

8.

1 point

A firm that is presently using the EOQ model and is planning to switch to the Economic Production Lot-Size model can expect

the Q* to increase

the maximum inventory level to increase

the order cycle to decrease

annual holding cost to be less than annual setup cost

9.

1 point

The objective of the EOQ with quantity discounts model is to

determine the minimum order quantity required for the maximum discount.

balance annual ordering and holding costs

minimize annual purchase cost

minimize the sum of annual carrying, holding, and purchase costs

10.

1 point

Safety Stock

can be determined by the EOQ formula

depends on the inventory position

depends on the variability of demand during lead time

is not needed if Q* is the actual order quantity

11.

1 point

Which cost would not be considered part of a holding cost?

cost of capital

shipping cost

insurance cost

warehouse overhead

12.

1 point

For the inventory model with planned shortages, the optimal order quantity results in

annual holding cost = annual ordering cost

annual holding cost = annual backordering cost.

annual ordering cost = annual holding cost + annual backordering cost.

annual ordering cost = annual holding cost - annual backordering cost.

13.

1 point

Which of the following is NOT implied when average inventory is Q/2, where Q is the order quantity?

An entire order quantity arrives at one time

The previous order quantity is entirely depleted when the next order arrives.

An order quantity is depleted at a uniform rate over time

Backorders are permitted

14.

1 point

The EOQ model

determines only how frequently to order

considers total cost

minimizes both ordering and holding costs.

All of the alternatives are correct

15.

1 point

For the EOQ model, which of the following relationships is incorrect?

As the order quantity increases, the number of orders placed annually decreases.

As the order quantity increases, annual holding cost increases

As the order quantity increases, annual ordering cost increases.

As the order quantity increases, average inventory increases

16.

1 point

Inventory

is held against uncertain usage so that a supply of items is available if needed

constitutes a small part of the cost of doing business

is not something that can be managed effectively

All of the alternatives are correct

17.

1 point

In the single-period inventory model with probabilistic demand,

surplus items are not allowed to be carried in future inventory

Co=Cu

probabilities are used to calculate expected losses.

All of the alternatives are correct

18.

1 point

The definition of service level used in this chapter is

the percentage of all demand that can be satisfied from inventory.

the percentage of all order cycles that do not experience a stockout.

the percentage of demand during the lead-time period that can be satisfied from inventory.

None of the alternatives is correct