POM EXAM STUDY QUESTIONS AND 100%
VERIFIED ANSWERS!!
The key difference between a fixed-order quantity inventory model where demand is
known and one where demand is uncertain is in computing the reorder point
T or F
True
Fixed-time period inventory models generate order quantities that vary from time period
to time period, depending on the usage rate.
T or F
True
Fixed-order quantity systems assume a random depletion of inventory, with less than an
immediate order when a reorder point is reached.
T or F
False
The standard fixed-time period model assumes that inventory is never counted but
determined by EOQ measures.
T or F
False
Safety stock is not necessary in any fixed-time period system.
T or F
false
In the fixed-time period model it is necessary to determine the inventory currently on hand
to calculate the size of the order to place with a vendor.
T or F
True
,Some inventory situations involve placing orders to cover only one demand period or to
cover short-lived items at frequent intervals.
T or F
True
The optimal stocking decision in inventory management, when using marginal analysis,
occurs at the point where the benefits derived from carrying the next unit are more than
the costs for that unit.
T or F
False
When stocked items are sold, the optimal inventory decision using marginal analysis is to
stock that quantity where the probable profit from the sale or use of the last unit is equal to
or greater than the probable losses if the last unit remains unsold.
T or F
True
Cycle counting is a physical inventory-taking technique in which inventory is counted on a
frequent basis rather than once or twice a year.
T or F
True
The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the
severe reduction of inventory and service levels that occurs when a firm has gone through a
hostile takeover.
T or F
False
The "sawtooth effect," is named after the jagged shape of the graph of inventory levels
over time.
T or F
, True
Price-break models deal with the fact that the selling price of an item varies with the order
size.
T or F
True
Price-break models deal with the fact that the selling price of an item generally increases as
the order size increases
T or F
False
Price-break models deal with discrete or step changes in price as order size changes rather
than a per-unit change
T or F
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes
necessary to calculate the economic order quantity for each possible price.
T or F
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes
necessary to calculate the economic order quantity for each possible price and to check to
see whether the lowest cost quantity is feasible.
T or F
True
In a price break model of lot sizing the lowest cost quantity is always feasible.
T or F
False
VERIFIED ANSWERS!!
The key difference between a fixed-order quantity inventory model where demand is
known and one where demand is uncertain is in computing the reorder point
T or F
True
Fixed-time period inventory models generate order quantities that vary from time period
to time period, depending on the usage rate.
T or F
True
Fixed-order quantity systems assume a random depletion of inventory, with less than an
immediate order when a reorder point is reached.
T or F
False
The standard fixed-time period model assumes that inventory is never counted but
determined by EOQ measures.
T or F
False
Safety stock is not necessary in any fixed-time period system.
T or F
false
In the fixed-time period model it is necessary to determine the inventory currently on hand
to calculate the size of the order to place with a vendor.
T or F
True
,Some inventory situations involve placing orders to cover only one demand period or to
cover short-lived items at frequent intervals.
T or F
True
The optimal stocking decision in inventory management, when using marginal analysis,
occurs at the point where the benefits derived from carrying the next unit are more than
the costs for that unit.
T or F
False
When stocked items are sold, the optimal inventory decision using marginal analysis is to
stock that quantity where the probable profit from the sale or use of the last unit is equal to
or greater than the probable losses if the last unit remains unsold.
T or F
True
Cycle counting is a physical inventory-taking technique in which inventory is counted on a
frequent basis rather than once or twice a year.
T or F
True
The "sawtooth effect," named after turn-around artist Al "Chainsaw" Dunlap, is the
severe reduction of inventory and service levels that occurs when a firm has gone through a
hostile takeover.
T or F
False
The "sawtooth effect," is named after the jagged shape of the graph of inventory levels
over time.
T or F
, True
Price-break models deal with the fact that the selling price of an item varies with the order
size.
T or F
True
Price-break models deal with the fact that the selling price of an item generally increases as
the order size increases
T or F
False
Price-break models deal with discrete or step changes in price as order size changes rather
than a per-unit change
T or F
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes
necessary to calculate the economic order quantity for each possible price.
T or F
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes
necessary to calculate the economic order quantity for each possible price and to check to
see whether the lowest cost quantity is feasible.
T or F
True
In a price break model of lot sizing the lowest cost quantity is always feasible.
T or F
False
