OPMA 401 Midterm 2(Complete solutions)
production order quantity correct answers -used when inventory builds up over a period of time after an
order is placed
-used when units are produced and sold simultaneously
ABC analysis correct answers a method for categorizing items so the most important items receive more
management attention
class A items correct answers top 15%
these items represent 70-80% of total dollar usage. Managerial involvement required
class B items correct answers next 35%
these intermediate items account for 15-25% of total dollar usage. Automated with management by
exception is typically used.
class C items correct answers last 50%
simple inventory controls for stock that collectively represents only 5% of annual dollar volume
cycle counting correct answers used to continuously reconcile inventory with inventory records. Rather
than shutting down the business for a full inventory count, items are randomly chosen to be counted,
based upon their classification
multiple-criteria ABC analysis correct answers incorporates non-cost criteria that influence an item's
importance e.g. lead time, obsolescence
manufacturer-driven substitution correct answers typically substitute a high-value product for a lower-
value product that is not available
customer-driven substitution correct answers if the original is not available they may decide to choose:
-a different size of the product
-a different formulation or flavour of the product
-a different but similarly functioning product, such as a different brand
production order quantity correct answers -used when inventory builds up over a period of time after an
order is placed
-used when units are produced and sold simultaneously
ABC analysis correct answers a method for categorizing items so the most important items receive more
management attention
class A items correct answers top 15%
these items represent 70-80% of total dollar usage. Managerial involvement required
class B items correct answers next 35%
these intermediate items account for 15-25% of total dollar usage. Automated with management by
exception is typically used.
class C items correct answers last 50%
simple inventory controls for stock that collectively represents only 5% of annual dollar volume
cycle counting correct answers used to continuously reconcile inventory with inventory records. Rather
than shutting down the business for a full inventory count, items are randomly chosen to be counted,
based upon their classification
multiple-criteria ABC analysis correct answers incorporates non-cost criteria that influence an item's
importance e.g. lead time, obsolescence
manufacturer-driven substitution correct answers typically substitute a high-value product for a lower-
value product that is not available
customer-driven substitution correct answers if the original is not available they may decide to choose:
-a different size of the product
-a different formulation or flavour of the product
-a different but similarly functioning product, such as a different brand
