Operations Management Exam 3 QUESTIONS AND COMPLETE CORRECT ANSWERS 2024

If the cost to change from producing one product to producing another were zero, the lot size would be very small. - correct answer True In inventory models, high holding costs tend to favor high inventory levels - correct answer False Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models - correct answer False The fixed-time-period inventory system has a smaller average inventory than the fixed-order-quantity system because it must also protect against stock outs during the review period when inventory is checked. - correct answer False The fixed-order-quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and, therefore, quicker response to a potential stock out. - correct answer True Fixed-order-quantity inventory systems determine the reorder point, R, and the order quantity, Q, values - correct answer True If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory. - correct answer False Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand. - correct answer True Fixed-time-period inventory models generate order quantities that vary from time period to time period, depending on the usage rate. - correct answer True