UARK SCMT 2103 REVIEW ANSWERS AND
QUESTIONS SET A+
✔✔Taking the value of the item, of the inventory, and ________________ the inventory
carrying cost percentage tells me how much it costs to carry that inventory annually. -
✔✔multiplying it by
✔✔The cost associated with inventory shrink is classified as a ________ cost. - ✔✔Risk
✔✔Which aspect of inventory carrying cost is usually the largest? - ✔✔Capital
✔✔Capital costs can be viewed as the _________________ associated with the money
tied up in inventory. - ✔✔Opportunity
✔✔Obsolescence is likely a bigger problem for which type of product. - ✔✔Fresh apples
✔✔Which is a cost associated with inventory? - ✔✔All of the above
Item cost
Ordering or setup cost
Shortage cost
Carrying cost
✔✔Inventory is good in the right _______________. - ✔✔Quantity
✔✔Inventory is a supply of goods that are held for purpose of _______________. -
✔✔Future utilization
✔✔Using the newsvendor model, average demand for items for a yearly sales event is
equal to 1000 with a standard deviation of 100. If the optimal in-stock probability is 83%,
you would order ___________? - ✔✔More than 1000 trees
, ✔✔If a retailer purchases a certain item under the newsvendor model and the cost of
overstocking and the cost of understocking are $180 and $290, respectively, what
would be the optimal in-stock probability? - ✔✔62%
✔✔Which of the following represents the cost of understocking? - ✔✔Lost net profit (per
unit)
✔✔When the transportation costs increase, the profit margin per unit ___________. -
✔✔decreases
✔✔If a retailer purchases a certain item under the newsvendor model and the optimal
in-stock probability is 84% - which is 0.99 standard deviations above the mean - what
would be the optimal order quantity given that the average expected demand is 239 with
a standard deviation of 20.65? (Round up) - ✔✔260
✔✔__________ tends to increase the in-stock probability. - ✔✔Both (a) and (b)
a) an increase in the cost of stocking out
b) a decrease in the cost of overstocking
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an attractive offer from a re-seller should any overstocking
occur. Consequently, the order quantity is expected to _________. - ✔✔increase
✔✔Under the newsvendor model, when the manufacturer increases its prices,
__________. - ✔✔the retailer's optimal order quantity is more likely to decrease.
✔✔What is the special problem posed by the newsvendor model? - ✔✔Given uncertain,
variable demand, the seller is likely to stock too many or too few with only a short time
frame to sell the product at full cost.
✔✔In a newsvendor model, which of the following is TRUE? - ✔✔An optimal order
quantity exists such that cost of overproduction and the cost of underproduction are
approximately equal to each other.
✔✔When using the continuous review model, what dictates when an order is placed? -
✔✔Reorder point
✔✔Which costs determine the Economic Order Quantity? - ✔✔Holding cost
Setup cost
QUESTIONS SET A+
✔✔Taking the value of the item, of the inventory, and ________________ the inventory
carrying cost percentage tells me how much it costs to carry that inventory annually. -
✔✔multiplying it by
✔✔The cost associated with inventory shrink is classified as a ________ cost. - ✔✔Risk
✔✔Which aspect of inventory carrying cost is usually the largest? - ✔✔Capital
✔✔Capital costs can be viewed as the _________________ associated with the money
tied up in inventory. - ✔✔Opportunity
✔✔Obsolescence is likely a bigger problem for which type of product. - ✔✔Fresh apples
✔✔Which is a cost associated with inventory? - ✔✔All of the above
Item cost
Ordering or setup cost
Shortage cost
Carrying cost
✔✔Inventory is good in the right _______________. - ✔✔Quantity
✔✔Inventory is a supply of goods that are held for purpose of _______________. -
✔✔Future utilization
✔✔Using the newsvendor model, average demand for items for a yearly sales event is
equal to 1000 with a standard deviation of 100. If the optimal in-stock probability is 83%,
you would order ___________? - ✔✔More than 1000 trees
, ✔✔If a retailer purchases a certain item under the newsvendor model and the cost of
overstocking and the cost of understocking are $180 and $290, respectively, what
would be the optimal in-stock probability? - ✔✔62%
✔✔Which of the following represents the cost of understocking? - ✔✔Lost net profit (per
unit)
✔✔When the transportation costs increase, the profit margin per unit ___________. -
✔✔decreases
✔✔If a retailer purchases a certain item under the newsvendor model and the optimal
in-stock probability is 84% - which is 0.99 standard deviations above the mean - what
would be the optimal order quantity given that the average expected demand is 239 with
a standard deviation of 20.65? (Round up) - ✔✔260
✔✔__________ tends to increase the in-stock probability. - ✔✔Both (a) and (b)
a) an increase in the cost of stocking out
b) a decrease in the cost of overstocking
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an attractive offer from a re-seller should any overstocking
occur. Consequently, the order quantity is expected to _________. - ✔✔increase
✔✔Under the newsvendor model, when the manufacturer increases its prices,
__________. - ✔✔the retailer's optimal order quantity is more likely to decrease.
✔✔What is the special problem posed by the newsvendor model? - ✔✔Given uncertain,
variable demand, the seller is likely to stock too many or too few with only a short time
frame to sell the product at full cost.
✔✔In a newsvendor model, which of the following is TRUE? - ✔✔An optimal order
quantity exists such that cost of overproduction and the cost of underproduction are
approximately equal to each other.
✔✔When using the continuous review model, what dictates when an order is placed? -
✔✔Reorder point
✔✔Which costs determine the Economic Order Quantity? - ✔✔Holding cost
Setup cost
