OMGT TEST 3 QUESTIONS WITH
CORRECT ANSWERS
Tata Motors assembles cars from their own parts and sub-assemblies and also controls
the mining and fabrication of materials used to create those parts. When Anand ordered
their luxury sedan with 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: - Correct
Answers -D) a mismatch between supply chain lead time and customer demand.
Which of the following relationships shows dependent demand inventory? - Correct
Answers -A) An automaker purchases four tires for each car they produce
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 the
restock level is 40. The order quantity is therefore: - Correct Answers -B) 37 sticks
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 4 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? - Correct Answers -D) 50
Cuffs
The inventory that companies hold to protect themselves against uncertainties in either
demand or replenishment time is called: - Correct Answers -A) Safety Stock
Individual links in the supply chain can stabilize their production at the most efficient
level by using: - Correct Answers -A) Smoothing Inventory
Inventory that is "in the pipeline" is: - Correct Answers -B) Transportation Inventory
Which of these conditions is likely to cause a decrease in the profitability of a stockout?
- Correct Answers -B) Lower lead time
Safety stock increases when: - Correct Answers -B) Average demand increases
The mismatch between timing of customer demand and supply chain lead times is what
drives the need for: - Correct Answers -B) Anticipation Inventory
, Which of these conditions is NOT necessary for the economic quantity model to be
valid? - Correct Answers -D) The item has a constant safety stock
The cashier waved the can of golden hominy across the holographic bar code reader
and it emitted a piercing beep. At the same time the customer's bill was rising, the
grocery store's inventory was automatically being reduced by 1 can of golden hominy
down to 3 cans. This was the bare minimum amount of hominy the store manager dared
carry in inventory, so the computer system automatically sent a message to the hominy
man, who loaded a few cases onto his delivery truck for tomorrow morning's trip to
replenish the store. This is a classic example of: - Correct Answers -C) a continuous
review system
If demand increases by 100%, the average inventory held in a system governed by the
EOQ model: - Correct Answers -D) is increased by 40%
A law firm always orders 50 cases of paper from their office supply company. They incur
an annual holding cost of $15 per case and have an ordering cost of $25 each time they
place an order. If their annual demand is 480 cases, how much could they save
annually by switching to their economic order quantity? - Correct Answers -A) $15
A manufacturer replenishes their packaging materials according to the economic
quantity model. They use 25,000 cases of packaging materials per year and order 500
cases at a time. Their cost to carry a case in inventory for a year is $12. How much
does it cost them to place an order with their supplier? - Correct Answers -D) $60
A local barbecue joint makes one massive batch of potato salad each day. If they run
out of this savory side before the end of the day, their last few customers are less than
satisfied, but if they make too much, they sell it to the local hog farmer for feed. Every
serving costs an equivalent of $0.23 to make, but can be sold for $1.50 to customers
and for $0.08 to the hog farmer. The average daily demand is for 200 servings with a
standard deviation of 20 servings. How many servings should be made each day? -
Correct Answers -B) 225
The factory produces product and ships it to the distributor. The distributor sends it to
the wholesaler when they receive an order. The wholesaler ships the product to the
retailer as the retailer requests replenishment. The customer visits the retailer's bricks
and mortar store to purchase the product when they run out. Which of these supply
chain members is most likely subjected to the greatest variability in customer demand? -
Correct Answers -A) Factory
Supply chain inventory: - Correct Answers -A) increases in cost as materials move
downstream
A university orders all office supplies, including red grading pens, out of a catalog from
the same supplier. Conservative estimates of the demand for these red pens are 12,000
pens per year. There is a $25 charge for placing an order and the university has a $10
CORRECT ANSWERS
Tata Motors assembles cars from their own parts and sub-assemblies and also controls
the mining and fabrication of materials used to create those parts. When Anand ordered
their luxury sedan with 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: - Correct
Answers -D) a mismatch between supply chain lead time and customer demand.
Which of the following relationships shows dependent demand inventory? - Correct
Answers -A) An automaker purchases four tires for each car they produce
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 the
restock level is 40. The order quantity is therefore: - Correct Answers -B) 37 sticks
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 4 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? - Correct Answers -D) 50
Cuffs
The inventory that companies hold to protect themselves against uncertainties in either
demand or replenishment time is called: - Correct Answers -A) Safety Stock
Individual links in the supply chain can stabilize their production at the most efficient
level by using: - Correct Answers -A) Smoothing Inventory
Inventory that is "in the pipeline" is: - Correct Answers -B) Transportation Inventory
Which of these conditions is likely to cause a decrease in the profitability of a stockout?
- Correct Answers -B) Lower lead time
Safety stock increases when: - Correct Answers -B) Average demand increases
The mismatch between timing of customer demand and supply chain lead times is what
drives the need for: - Correct Answers -B) Anticipation Inventory
, Which of these conditions is NOT necessary for the economic quantity model to be
valid? - Correct Answers -D) The item has a constant safety stock
The cashier waved the can of golden hominy across the holographic bar code reader
and it emitted a piercing beep. At the same time the customer's bill was rising, the
grocery store's inventory was automatically being reduced by 1 can of golden hominy
down to 3 cans. This was the bare minimum amount of hominy the store manager dared
carry in inventory, so the computer system automatically sent a message to the hominy
man, who loaded a few cases onto his delivery truck for tomorrow morning's trip to
replenish the store. This is a classic example of: - Correct Answers -C) a continuous
review system
If demand increases by 100%, the average inventory held in a system governed by the
EOQ model: - Correct Answers -D) is increased by 40%
A law firm always orders 50 cases of paper from their office supply company. They incur
an annual holding cost of $15 per case and have an ordering cost of $25 each time they
place an order. If their annual demand is 480 cases, how much could they save
annually by switching to their economic order quantity? - Correct Answers -A) $15
A manufacturer replenishes their packaging materials according to the economic
quantity model. They use 25,000 cases of packaging materials per year and order 500
cases at a time. Their cost to carry a case in inventory for a year is $12. How much
does it cost them to place an order with their supplier? - Correct Answers -D) $60
A local barbecue joint makes one massive batch of potato salad each day. If they run
out of this savory side before the end of the day, their last few customers are less than
satisfied, but if they make too much, they sell it to the local hog farmer for feed. Every
serving costs an equivalent of $0.23 to make, but can be sold for $1.50 to customers
and for $0.08 to the hog farmer. The average daily demand is for 200 servings with a
standard deviation of 20 servings. How many servings should be made each day? -
Correct Answers -B) 225
The factory produces product and ships it to the distributor. The distributor sends it to
the wholesaler when they receive an order. The wholesaler ships the product to the
retailer as the retailer requests replenishment. The customer visits the retailer's bricks
and mortar store to purchase the product when they run out. Which of these supply
chain members is most likely subjected to the greatest variability in customer demand? -
Correct Answers -A) Factory
Supply chain inventory: - Correct Answers -A) increases in cost as materials move
downstream
A university orders all office supplies, including red grading pens, out of a catalog from
the same supplier. Conservative estimates of the demand for these red pens are 12,000
pens per year. There is a $25 charge for placing an order and the university has a $10
