OMGT Exam 3 Study Guide | Operations Management Review, Key Concepts & Practice
Questions
1. Tata Motors assembles cars from their own parts and subassemblies and also controls the
mining and fabrication of the materials used to create those parts. When Anand ordered their
luxury sedan with the platinum dashboard he knew he wouldn't be taking delivery of his dream
car the next week. Rather, he would be waiting a while thanks to:
a. a mismatch between overall demand levels and productive capacity.
b. a mismatch between demand and the most efficient production volume.
c. a mismatch between demand and the most efficient shipment volume.
d. a mismatch between supply chain lead time and customer demand. - ANS ✔✔d. a mismatch
between supply chain lead time and customer demand.
2. Which of the following relationships shows dependent demand inventory?
a. An automaker purchases four tires for each car they produce.
b. A business purchases a new car when the old one wears out.
c. A tire maker buys cleaning supplies.
d. A winemaker buys grapes from farmers in the Columbia Valley. - ANS ✔✔a. An automaker
purchases four tires for each car they produce.
3. The beef jerky driver shows up every Monday to take orders from his convenience store
customers. One fine Monday morning he stops in the Quik-E Mart and notes that there are only
three sticks on the shelves. Consulting his route sheet, he discovers that the restock level is 40.
The order quantity is therefore:
a. 3 sticks.
b. 37 sticks.
c. 40 sticks.
d. Cannot be determined with the information given. - ANS ✔✔b. 37 sticks.
,4. A hospital's biomedical repair shop uses a 4-week periodic system to maintain the inventory
on the blood pressure cuff repair parts. They use an average 40 adult arm cuffs with a standard
deviation of 6 cuffs every four weeks. Cuffs aren't the most critical item they carry, but the
manager would like to avoid the embarrassment of a stockout at least 95% of the time. What
should their restocking level be?
a. 40 cuffs
b. 46 cuffs
c. 52 cuffs
d. 50 cuffs - ANS ✔✔d. 50 cuffs
5. The inventory that companies hold to protect themselves against uncertainties in either
demand or replenishment time is called:
a. safety stock.
b. anticipation inventory.
c. hedge inventory.
d. smoothing inventory. - ANS ✔✔a. safety stock.
6. Individual links in the supply chain can stabilize their production at the most efficient level by
using:
a. smoothing inventory.
b. safety stock.
c. anticipation inventory.
d. linkage inventory - ANS ✔✔a. smoothing inventory.
7. Inventory that is "in the pipeline" is:
a. anticipation inventory.
b. transportation inventory.
c. smoothing inventory.
, d. hedge inventory. - ANS ✔✔b. transportation inventory.
8. Which of these conditions is likely to cause a decrease in the probability of a stockout?
a. higher lead time variance
b. lower lead time
c. higher demand level variance
d. lower service level - ANS ✔✔b. lower lead time
9. Safety stock increases when:
a. probability of a stockout increases.
b. average demand increases.
c. delivery speed increases.
d. demand fluctuations decrease. - ANS ✔✔b. average demand increases.
10. The mismatch between timing of customer demand and supply chain lead times is what
drives the need for:
a. safety stock.
b. anticipation inventory.
c. cycle stock.
d. hedge inventory. - ANS ✔✔b. anticipation inventory.
11. Which of these conditions is NOT necessary for the economic order quantity model to be
valid?
a. The item has a constant demand.
b. The item has a constant lead time.
c. The item has a constant price.
d. The item has a constant safety stock. - ANS ✔✔d. The item has a constant safety stock.
Questions
1. Tata Motors assembles cars from their own parts and subassemblies and also controls the
mining and fabrication of the materials used to create those parts. When Anand ordered their
luxury sedan with the platinum dashboard he knew he wouldn't be taking delivery of his dream
car the next week. Rather, he would be waiting a while thanks to:
a. a mismatch between overall demand levels and productive capacity.
b. a mismatch between demand and the most efficient production volume.
c. a mismatch between demand and the most efficient shipment volume.
d. a mismatch between supply chain lead time and customer demand. - ANS ✔✔d. a mismatch
between supply chain lead time and customer demand.
2. Which of the following relationships shows dependent demand inventory?
a. An automaker purchases four tires for each car they produce.
b. A business purchases a new car when the old one wears out.
c. A tire maker buys cleaning supplies.
d. A winemaker buys grapes from farmers in the Columbia Valley. - ANS ✔✔a. An automaker
purchases four tires for each car they produce.
3. The beef jerky driver shows up every Monday to take orders from his convenience store
customers. One fine Monday morning he stops in the Quik-E Mart and notes that there are only
three sticks on the shelves. Consulting his route sheet, he discovers that the restock level is 40.
The order quantity is therefore:
a. 3 sticks.
b. 37 sticks.
c. 40 sticks.
d. Cannot be determined with the information given. - ANS ✔✔b. 37 sticks.
,4. A hospital's biomedical repair shop uses a 4-week periodic system to maintain the inventory
on the blood pressure cuff repair parts. They use an average 40 adult arm cuffs with a standard
deviation of 6 cuffs every four weeks. Cuffs aren't the most critical item they carry, but the
manager would like to avoid the embarrassment of a stockout at least 95% of the time. What
should their restocking level be?
a. 40 cuffs
b. 46 cuffs
c. 52 cuffs
d. 50 cuffs - ANS ✔✔d. 50 cuffs
5. The inventory that companies hold to protect themselves against uncertainties in either
demand or replenishment time is called:
a. safety stock.
b. anticipation inventory.
c. hedge inventory.
d. smoothing inventory. - ANS ✔✔a. safety stock.
6. Individual links in the supply chain can stabilize their production at the most efficient level by
using:
a. smoothing inventory.
b. safety stock.
c. anticipation inventory.
d. linkage inventory - ANS ✔✔a. smoothing inventory.
7. Inventory that is "in the pipeline" is:
a. anticipation inventory.
b. transportation inventory.
c. smoothing inventory.
, d. hedge inventory. - ANS ✔✔b. transportation inventory.
8. Which of these conditions is likely to cause a decrease in the probability of a stockout?
a. higher lead time variance
b. lower lead time
c. higher demand level variance
d. lower service level - ANS ✔✔b. lower lead time
9. Safety stock increases when:
a. probability of a stockout increases.
b. average demand increases.
c. delivery speed increases.
d. demand fluctuations decrease. - ANS ✔✔b. average demand increases.
10. The mismatch between timing of customer demand and supply chain lead times is what
drives the need for:
a. safety stock.
b. anticipation inventory.
c. cycle stock.
d. hedge inventory. - ANS ✔✔b. anticipation inventory.
11. Which of these conditions is NOT necessary for the economic order quantity model to be
valid?
a. The item has a constant demand.
b. The item has a constant lead time.
c. The item has a constant price.
d. The item has a constant safety stock. - ANS ✔✔d. The item has a constant safety stock.
