OSC Exam 2 Questions With Complete Solutions
Your on-hand inventory plus outstanding orders minus any backorder quantities is your___________. -
(ANSWER)inventory position
Which of the following is generally Not a reason to reduce inventory?
To minimize property taxes and insurance premiums
To minimize the cost of storage and handling
To minimize shrinkage and spoilage
To increase customer service levels
To minimize interest paid on operating capital - (ANSWER)To increase customer service levels
Which of the following is not a component of total inventory cost?
Inventory position
Ordering cost
Overhead cost
Order quantity
Annual demand - (ANSWER)Overhead cost
An inventory review system that always orders the same quantity of items but may have differing
periods of time between orders has what type of review system? - (ANSWER)Continuous
The time during which safety stock must protect against running out of stock is known as the ________.
- (ANSWER)Protection interval
The total annual inventory cost will be minimized when the holding cost is equal to what? -
(ANSWER)The ordering cost
What kind of demand can be derived from a "parent" item or can be a component part? -
(ANSWER)Dependent
, OSC Exam 2 Questions With Complete Solutions
The primary objective of an inventory system is to determine - (ANSWER)When items should be ordered
and what quantity should be ordered.
Why would a company offer discounted pricing for items that they sell? - (ANSWER)To take advantage
of economies of scale
Cycle counting is used to ensure _________. - (ANSWER)Inventory accuracy
If the excess cost is higher than the shortage cost, then you should... - (ANSWER)Order fewer than the
average expected demand.
The newsvendor problem helps to model inventory for what type of products? - (ANSWER)Perishable
items
Which of the following describes a periodic review system? - (ANSWER)Because airlines weigh the cost
of overbooking versus the cost of empty seats.
How is the setting of overbooking flights a newsvendor setting? - (ANSWER)Because airlines weigh the
cost of overbooking versus the cost of empty seats.
When does a base stock system issue an order for inventory? - (ANSWER)Whenever a withdrawal is
made
A components manufacturer uses approximately 20,000 units annually of an item. They are used at a
steady rate during the 250 workdays that the plant operates. The cost of each item is $7.00, and the
annual carrying cost is $0.50 per unit per year. The ordering cost is $50. What is the economic order
quantity? - (ANSWER)2,000 units
A product has an average demand of 40 units per week and a standard deviation of 10 units per week
(normally distributed). The lead time is 5 weeks. What is the safety stock inventory if the organization
wants to achieve a 90% cycle-service level? - (ANSWER)29 units
Your on-hand inventory plus outstanding orders minus any backorder quantities is your___________. -
(ANSWER)inventory position
Which of the following is generally Not a reason to reduce inventory?
To minimize property taxes and insurance premiums
To minimize the cost of storage and handling
To minimize shrinkage and spoilage
To increase customer service levels
To minimize interest paid on operating capital - (ANSWER)To increase customer service levels
Which of the following is not a component of total inventory cost?
Inventory position
Ordering cost
Overhead cost
Order quantity
Annual demand - (ANSWER)Overhead cost
An inventory review system that always orders the same quantity of items but may have differing
periods of time between orders has what type of review system? - (ANSWER)Continuous
The time during which safety stock must protect against running out of stock is known as the ________.
- (ANSWER)Protection interval
The total annual inventory cost will be minimized when the holding cost is equal to what? -
(ANSWER)The ordering cost
What kind of demand can be derived from a "parent" item or can be a component part? -
(ANSWER)Dependent
, OSC Exam 2 Questions With Complete Solutions
The primary objective of an inventory system is to determine - (ANSWER)When items should be ordered
and what quantity should be ordered.
Why would a company offer discounted pricing for items that they sell? - (ANSWER)To take advantage
of economies of scale
Cycle counting is used to ensure _________. - (ANSWER)Inventory accuracy
If the excess cost is higher than the shortage cost, then you should... - (ANSWER)Order fewer than the
average expected demand.
The newsvendor problem helps to model inventory for what type of products? - (ANSWER)Perishable
items
Which of the following describes a periodic review system? - (ANSWER)Because airlines weigh the cost
of overbooking versus the cost of empty seats.
How is the setting of overbooking flights a newsvendor setting? - (ANSWER)Because airlines weigh the
cost of overbooking versus the cost of empty seats.
When does a base stock system issue an order for inventory? - (ANSWER)Whenever a withdrawal is
made
A components manufacturer uses approximately 20,000 units annually of an item. They are used at a
steady rate during the 250 workdays that the plant operates. The cost of each item is $7.00, and the
annual carrying cost is $0.50 per unit per year. The ordering cost is $50. What is the economic order
quantity? - (ANSWER)2,000 units
A product has an average demand of 40 units per week and a standard deviation of 10 units per week
(normally distributed). The lead time is 5 weeks. What is the safety stock inventory if the organization
wants to achieve a 90% cycle-service level? - (ANSWER)29 units
