SCM Exam 2 UPDATED ACTUAL Questions and CORRECT Answers
The P-system of inventory submits inventory orders at
False
random times. True or False
What is another name for the "P-system" of inventory? Periodic Review Inventory System
What are the two main challenges of the P-system? Length of review period and Amount of inventory to have
What is the great benefit of the P-system? Simplicity in managing the system
Safety stock is inventory held to guard against uncertainty.
True
True or False
Which two things drive the need for safety stock? Demand variability and Delays
The "right" amount of safety stock is often a function of
The probability of meeting demand during a delay
Service Level. Service Level is
The critical fraction formula output is the optimal quantity
False
to order in a newsvendor model. True or False
Fixed cost of ordering (submitting an order) and Cost of
The Critical Fraction formula balances which two costs?
ordering too few (under stock)
The critical fraction gives us a probability because: Demand is unknown
Ordering cost only consists of the shipping cost from
False
supplier to customer. True or False
All of the following represent external failure cost EXCEPT
the cost of:
Repairing items covered by warranty.
Scrapping defective raw material.
Replacing defective items found by customers.
Loss of goodwill and reputation.
, Scrapping defective raw material.
Persons with responsibilities in which business function
will make decisions regarding new product testing pro- Marketing
grams?
Total Quality Management: Is managed proactively and Focuses on the customer
Which of these is not a cost of quality?
Inspection cost
Design cost Design cost
External failure cost
Prevention cost
Design-for-Six-Sigma programs offer a set of quality stan-
False
dards accepted by all industries. True or False
Ordering costs is which type of costs? Variable
Which of the following would be considered part of Or-
dering Cost? (choose all that apply)
Minimum shipping charge
Minimum shipping charge and Renting a truck to haul the
Postage to mail the order to a supplier (who still lives in order (and only this order, no other business is used for
the early 20th century) this truck's one time rental)
Renting a truck to haul the order (and only this order, no
other business is used for this truck's one time rental)
Cost of the oflce building housing your employees.
2/7
The P-system of inventory submits inventory orders at
False
random times. True or False
What is another name for the "P-system" of inventory? Periodic Review Inventory System
What are the two main challenges of the P-system? Length of review period and Amount of inventory to have
What is the great benefit of the P-system? Simplicity in managing the system
Safety stock is inventory held to guard against uncertainty.
True
True or False
Which two things drive the need for safety stock? Demand variability and Delays
The "right" amount of safety stock is often a function of
The probability of meeting demand during a delay
Service Level. Service Level is
The critical fraction formula output is the optimal quantity
False
to order in a newsvendor model. True or False
Fixed cost of ordering (submitting an order) and Cost of
The Critical Fraction formula balances which two costs?
ordering too few (under stock)
The critical fraction gives us a probability because: Demand is unknown
Ordering cost only consists of the shipping cost from
False
supplier to customer. True or False
All of the following represent external failure cost EXCEPT
the cost of:
Repairing items covered by warranty.
Scrapping defective raw material.
Replacing defective items found by customers.
Loss of goodwill and reputation.
, Scrapping defective raw material.
Persons with responsibilities in which business function
will make decisions regarding new product testing pro- Marketing
grams?
Total Quality Management: Is managed proactively and Focuses on the customer
Which of these is not a cost of quality?
Inspection cost
Design cost Design cost
External failure cost
Prevention cost
Design-for-Six-Sigma programs offer a set of quality stan-
False
dards accepted by all industries. True or False
Ordering costs is which type of costs? Variable
Which of the following would be considered part of Or-
dering Cost? (choose all that apply)
Minimum shipping charge
Minimum shipping charge and Renting a truck to haul the
Postage to mail the order to a supplier (who still lives in order (and only this order, no other business is used for
the early 20th century) this truck's one time rental)
Renting a truck to haul the order (and only this order, no
other business is used for this truck's one time rental)
Cost of the oflce building housing your employees.
2/7
