OPMA 3306 Chapter 4 Exam Questions And
Answers 100% Solved
Inventory is defined as the stock of any item or resource used in an organization. - ANSWER
True
An inventory system is a set of policies and controls that monitors levels of inventory and
determines what levels should be maintained, when stock should be replenished, and how
large orders should be. - ANSWER True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to specify when items should be ordered. - ANSWER True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to determine the level of quality to specify. - ANSWER False
The basic purpose of inventory analysis in manufacturing and stockkeeping services is to
specify (1) when items should be ordered and (2) how large the order should be.
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to determine how large the orders to vendors should be. - ANSWER True
In inventory models, high holding costs tend to favor high inventory levels. - ANSWER False
,Holding (or carrying) costs. This broad category includes the costs for storage facilities,
handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the
opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels
and frequent replenishment.
In inventory models, high holding costs tend to favor low inventory levels and frequent
replenishment. - ANSWER True
If the cost to change from producing one product to producing another were zero the lot size
would be very small. - ANSWER True
Shortage costs are precise and easy to measure. - ANSWER False
When the stock of an item is depleted, an order for that item must either wait until the stock
is replenished or be canceled. There is a trade-off between carrying stock to satisfy demand
and the costs resulting from stockout. This balance is sometimes difficult to obtain, because it
may not be possible to estimate lost profits, the effects of lost customers, or lateness
penalties.
Dependent demand inventory levels are usually managed by calculations using
calculus-driven, cost-minimizing models. - ANSWER False
Independent demand, the need for any one item is a direct result of the need for some other
item, usually a higher-level item of which it is part.
,The fixed-time period inventory system has a smaller average inventory than the fixed-order
quantity system because it must also protect against stockouts during the review period when
inventory is checked. - ANSWER False
Fixed-time period model has a larger average inventory because it must also protect against
stockout during the review period, T; the fixed-order quantity model has no review period.
The fixed-order quantity inventory model favors less expensive items because average
inventory is lower. - ANSWER False
The fixed-order quantity model favors more expensive items because average inventory is
lower.
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 stockout. - ANSWER True
The fixed-order quantity inventory model requires more time to maintain because every
addition or withdrawal is logged. - ANSWER True
Fixed-order quantity inventory models are "event triggered." - ANSWER True
, Fixed-order quantity inventory models are "time triggered." - ANSWER False
The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time
period models are "time triggered."
Fixed-time period inventory models are "event triggered." - ANSWER False
The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time
period models are "time triggered."
Fixed-time period inventory models are "time triggered." - ANSWER True
Fixed-order quantity inventory systems determine the reorder point, R and the order quantity,
Q values. - ANSWER True
The computation of a firm's inventory position is found by taking the inventory on hand and
adding it to the on-order inventory, and then subtracting back-ordered inventory. - ANSWER
True
Using the probability approach we assume that the demand over a period of time is normally
distributed. - ANSWER True
Safety stock can be defined as the amount of inventory carried in addition to the expected
Answers 100% Solved
Inventory is defined as the stock of any item or resource used in an organization. - ANSWER
True
An inventory system is a set of policies and controls that monitors levels of inventory and
determines what levels should be maintained, when stock should be replenished, and how
large orders should be. - ANSWER True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to specify when items should be ordered. - ANSWER True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to determine the level of quality to specify. - ANSWER False
The basic purpose of inventory analysis in manufacturing and stockkeeping services is to
specify (1) when items should be ordered and (2) how large the order should be.
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is
to determine how large the orders to vendors should be. - ANSWER True
In inventory models, high holding costs tend to favor high inventory levels. - ANSWER False
,Holding (or carrying) costs. This broad category includes the costs for storage facilities,
handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the
opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels
and frequent replenishment.
In inventory models, high holding costs tend to favor low inventory levels and frequent
replenishment. - ANSWER True
If the cost to change from producing one product to producing another were zero the lot size
would be very small. - ANSWER True
Shortage costs are precise and easy to measure. - ANSWER False
When the stock of an item is depleted, an order for that item must either wait until the stock
is replenished or be canceled. There is a trade-off between carrying stock to satisfy demand
and the costs resulting from stockout. This balance is sometimes difficult to obtain, because it
may not be possible to estimate lost profits, the effects of lost customers, or lateness
penalties.
Dependent demand inventory levels are usually managed by calculations using
calculus-driven, cost-minimizing models. - ANSWER False
Independent demand, the need for any one item is a direct result of the need for some other
item, usually a higher-level item of which it is part.
,The fixed-time period inventory system has a smaller average inventory than the fixed-order
quantity system because it must also protect against stockouts during the review period when
inventory is checked. - ANSWER False
Fixed-time period model has a larger average inventory because it must also protect against
stockout during the review period, T; the fixed-order quantity model has no review period.
The fixed-order quantity inventory model favors less expensive items because average
inventory is lower. - ANSWER False
The fixed-order quantity model favors more expensive items because average inventory is
lower.
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 stockout. - ANSWER True
The fixed-order quantity inventory model requires more time to maintain because every
addition or withdrawal is logged. - ANSWER True
Fixed-order quantity inventory models are "event triggered." - ANSWER True
, Fixed-order quantity inventory models are "time triggered." - ANSWER False
The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time
period models are "time triggered."
Fixed-time period inventory models are "event triggered." - ANSWER False
The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time
period models are "time triggered."
Fixed-time period inventory models are "time triggered." - ANSWER True
Fixed-order quantity inventory systems determine the reorder point, R and the order quantity,
Q values. - ANSWER True
The computation of a firm's inventory position is found by taking the inventory on hand and
adding it to the on-order inventory, and then subtracting back-ordered inventory. - ANSWER
True
Using the probability approach we assume that the demand over a period of time is normally
distributed. - ANSWER True
Safety stock can be defined as the amount of inventory carried in addition to the expected
