OTM Final Exam Questions With Correct Detailed Answers.

c. distributors can store more items per square meter and require space that is less aesthetically pleasing - correct answers Which of the following statements best explains why distributors tend to spend less on storage space per square meter per year than retailers? a. distributors provide break bulk service b. distributors don't actually make product c. distributors can store more items per square meter and require space that is less aesthetically pleasing d. distributors enjoy higher gross margins than retailers c. the more inventory, the higher the in-stock probability - correct answers What is the relationship between the average inventory and the in-stock probability? a. the more inventory, the lower the in-stock probability b. there isn't a definitive relationship- more inventory could mean a lower or a higher in-stock probability c. the more inventory, the higher the in-stock probability a. the primary supplier is located in a flood-prone region, while the second supplier's location is not subject to flooding - correct answers Which of the following is the best reason to add a second supplier for a critical component? a. the primary supplier is located in a flood-prone region, while the second supplier's location is not subject to flooding b. the second supplier is able to offer the same lead time as the first supplier c. adding a second supplier helps reduce the bullwhip effect d. adding a second supplier will increase the firm's purchasing power for the component c. the in-stock probability requirement for the product is high - correct answers A company is deciding whether to produce a new gadget at a plant located in a country close to consumer at a higher labor cost and a shorter lead time or to outsource it to a country with a low labor cost but a longer lead time. Which consideration would provide the most support to produce in the high-cost location? a. the holding costs per unit are loq b. transportation costs per unit per km are low c. the in-stock probability requirement for the product is high d. customers are willing to wait for delivery 90% - correct answers For 10 percent of the products in a category, a firm fails to satisfy all demand during the month What is the in-stock probability? True - correct answers The news-vendor model works well for perishable items T/F b. cost of ordering too many e. running out and losing profits - correct answers The news-vendor model balances which two costs a. fixed cost of ordering b. cost of ordering too many c. variable of shelving cost d. overhead of facility operations e. running out and losing profits b. optimal probability of running out - correct answers The basic calculation in the news-vendor model will result in a calculation of a. minimum order quantity b. optimal probability of running out c. exact profit that will be earned d. the probability that next year's styles will be more popular than this year's a. product X because it has less certain demand - correct answers The news-vendor orders the quantity that maximizes expected profit for two products X any Y. The critical ratio for both products is .8. The demand forecasts for both products is 9,000 units and both are normally distributed. Product X has more uncertain demand (has a higher standard deviation). Which of the two products does the news-vendor order more? a. product X because it has less certain demand b. product Y because it has more certain demand c. the order quantities are the same because they have the same critical ratio a. Yes- a firm does not stock out and have leftover inventory at the same time, but the stockout probability can be positive even though there is positive expected leftover inventory - correct answers Suppose the news-vendor model describe's a firms operations decision. Is it possible to have positive stockout probability and positive expected leftover inventory? a. it is possible to receive a purchase discount if the order quantity is sufficiently large - correct answers Which of the following is NOT an assumption of the EOQ model? a. it is possible to receive purchase discount if the order quantity is sufficiently large b. there is a fixed cost to submit each order that is independent of the amount ordered c. demand occurs at a constant rate per unit of time d. there is a cost to hold each unit of inventory per unit of time b. holding cost The EOQ minimizes the sum of the ordering cost and which of the following costs - correct answers The EOQ minimizes the sum of the ordering cost and which of the following costs a. stockout costs b. holding cost c. purchasing cost d. quality cost c. lower holding cost and higher holding cost - correct answers A firm evaluates its EOQ quantity to equal 180 cases, but it chooses an order quantity of 200 cases. Relative to the order quantity of 180 cases, the order quantity of 200 has a. higher ordering cost and higher holding cost b. higher ordering cost and lower holding cost c. lower ordering cost and higher holding cost d. lower ordering cost and lower holding cost False - correct answers The time value of money, opportunity cost, is not part of the calculation of EOQ holding cost T/F c. overhead - correct answers Holding cost is which type of cost? a. fixed b. variable c. overhead a. refrigeration costs d. weekly inventory quality checks for every unit in inventory - correct answers Which of the following would be considered a direct holding cost? a. refrigeration costs b. disposal cost after the unit is removed from inventory c. purchasing cost of a new forklift for the warehouse d. weekly inventory quality checks for every unit in inventory False - correct answers The p-system of inventory submits inventory orders at random times T/F d. periodic review inventory system - correct answers What is another name for the "P-system" of inventory? a. partial request inventory order system b. poorly routed inventory ordering system c. particularly responsive complicated ordering system d. periodic review inventory system b. old demand data - correct answers When creating a time series based forecast for the amount of soda to be cold in the cafeteria next week, which data sources can you include in your forecasting process? a. the opinion of the principal b. old demand data c. data about upcoming sports events d. the age of the cafeteria worker False - correct answers A company wants to use regression analysis to forecast the demand for the next quarter. In such a regression model, demand would be the independent variable T/F c. the average of all forecast errors is zero - correct answers A company has an unbiased forecast for its demand. What does that mean? a. all forecast errors are equal to zero b. all forecast errors are less than 1 percent c. the average of all forecast errors is zero d. the standard deviation of forecast errors is zero d. to average the squared forecast errors - correct answers The intuition behind the MSE metric to evaluate old forecasts is a. to sum up the forecast errors b. to sum up the squared forecast errors c. to sum up the absolute value of the forecast errors d. to average the squared forecast errors e. to average the absolute values of the forecast errors No - correct answers Using the moving average forecast, is it possible to forecast a demand that is bigger than any previously observed demand? Yes/No Yes - correct answers Using the double exponential smoothing forecast, is it possible to forecast a demand that is bigger than any previously observed demand? Yes/No d. it is not possible to determine the total completion time from the given information - correct answers A project has four activities that take 4, 3, 6, and 7 days, respectively. What is the total completion time for the project? a. 3 days, because this is the minimum time b. 7 days, because this is the maximum time c. 20 days, because this is the sum of the times d. it is not possible to determine the total completion time from the given information d. none of these statements is correct - correct answers A critical path in a project is a sequence of activities that a. has the shortest time b. has the smallest number of activiites c. has the shortest budget d. none of these statements is correct d. all of these statements are correct - correct answers Which of the following statements is correct with respect to slack time? a. the slack time of an activity is the latest completion time of the activity minus the earliest completion time b. the slack time of an activity is the l