61) SAP, Oracle, and PeopleSoft are all examples of A) MRP systems

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61) SAP, Oracle, and PeopleSoft are all
examples of
A) MRP systems.
B) ERP systems.
C) JIT systems.
D) EDI systems.
E) None of the above
62) R. C. Barker makes purchasing
decisions for his company. One product that he buys costs $50 per unit when the
order quantity is less than 500. When the quantity ordered is 500 or more, the
price per unit drops to $48. The ordering cost is $30 per order and the annual
demand is 7,500 units. The holding cost is 10 percent of the purchase cost. If
R. C. wishes to minimize his total annual inventory costs, he must evaluate the
total cost for two possible order quantities. What are these two possible
quantities? (Round answer to nearest unit.)
A) 300 and 306
B) 300 and 500
C) 306 and 50
D) 200 and 306
E) None of the above

63) The annual demand for a product is
1,000 units. The company orders 200 units each time an order is placed. The
lead-time is 6 days, and the company has determined that 20 units should be
held as a safety stock. There are 250 working days per year. What is the
reorder point?
A) 20
B) 24
C) 44
D) 120
E) None of the above
64) The annual demand for a product has
been projected at 2,000 units. This demand is assumed to be constant throughout
the year. The ordering cost is $20 per order, and the holding cost is 20
percent of the purchase cost. Currently, the purchase cost is $40 per unit.
There are 250 working days per year. Whenever an order is placed, it is known
that the entire order will arrive on a truck in 6 days. Currently, the company
is ordering 500 units each time an order is placed. What should be the reorder
point (excluding any safety stock) under the current policy?
A) 48
B) 100
C) 6
D) 24
E) None of the above
65) Andre Candess manages an office supply
store. One product in the store is computer paper. Andre knows that 10,000
boxes will be sold this year at a constant rate throughout the year. There are
250 working days per year and the lead-time is 3 days. The cost of placing an
order is $30, while the holding cost is $15 per box per year. If Andre orders
500 boxes each time he orders from his supplier, what would his total annual
inventory cost be (holding cost plus ordering cost)?
A) $3,000
B) $4,350
C) $3,075
D) $3,750
E) None of the above

66) Rolf Steps is the production manager
for a local manufacturing firm. This company produces staplers and other items.
The holding cost is $2 per unit per year. The cost of setting up the production
line for this is $25. There are 200 working days per year. The production rate
for this product is 80 per day. If the production order quantity is 200 units,
what was the daily demand (rounded to the nearest whole unit)?
A) 6 units
B) 7 units
C) 8 units
D) 9 units
E) None of the above

67) The “point at which to
reorder” depends directly on which of the following?
A) EOQ
B) ordering cost
C) lead-time
D) storage costs
E) unit purchasing cost
68) Judith Thompson, the manager of the
student center cafeteria, has added pizza to the menu. The pizza is ordered
frozen from a local pizza establishment and baked at the cafeteria. Judith anticipates
a weekly demand of 10 pizzas. The cafeteria is open 45 weeks a year, 5 days a
week. The ordering cost is $15 and the holding cost is $0.40 per pizza per
year. The pizza vendor has a 4-day lead-time and Judith wants to maintain 1
pizza for safety stock. What is the optimal reorder point?
A) 10
B) 8
C) 4
D) 9
E) None of the above

69) R. C. Barker makes purchasing
decisions for his company. One product that he buys costs $50 per unit when the
order quantity is less than 500. When the quantity ordered is 500 or more, the
price per unit drops to $48. The ordering cost is $30 per order and the annual
demand is 7,500 units. The holding cost is 10 percent of the purchase cost. How
many units should R. C. order to minimize his total annual inventory cost?
(Round your answer to the nearest unit.)
A) 300
B) 306
C) 500
D) 200
E) None of the above

70) The annual demand for a product has
been projected at 2,000 units. This demand is assumed to be constant throughout
the year. The ordering cost is $20 per order, and the holding cost is 20
percent of the purchase cost. Currently, the purchase cost is $40 per unit. There
are 250 working days per year. Whenever an order is placed, it is known that
the entire order will arrive on a truck in 6 days. How many units should the
company order each time an order is placed if the company wishes to minimize
total inventory cost?
A) 100
B) 200
C) 250
D) 500
E) None of the above
71) Consider the material structure tree
for item A below. If 20 units of A are needed, how many units of D are needed?

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A) 11
B) 30
C) 160
D) 60
E) 220

72) Consider the material structure tree
for item A below. If 10 units of A are needed, how many units of E are needed?

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A) 60
B) 6
C) 240
D) 24
E) 480

73) Extra inventory that is used to avoid
stockouts is known as
A) planned shortages.
B) quantity discounts.
C) safety stock.
D) service level.
E) ABC analysis.
74) An inventory model that can handle
dependent demand is called a(n)
A) MRP system.
B) JIT system.
C) ERP system.
D) Kanban system.
E) VMI system.

75) As the service level increases,
A) safety stock increases at a decreasing
rate.
B) safety stock increases at an increasing
rate.
C) safety stock decreases at an increasing
rate.
D) safety stock decreases at a decreasing
rate.
E) None of the above

76) A person is using the normal
distribution to determine the safety stock for a product. What z value would be
associated with a 90 percent service level?
A) 0.90
B) 1.28
C) 0.53
D) 0.64
E) None of the above

77) The demand during the lead-time is
normally distributed with a mean of 40 and a standard deviation of 4. If the
company wishes to maintain a 90 percent service level, how much safety stock
should be held?
A) 45.12
B) 41.28
C) 1.28
D) 5.12
E) None of the above

78) The annual demand for a product is
1,000 units. The company orders 200 units each time an order is placed. The
lead-time is 6 days. There are 250 working days per year. If the reorder point
is 50, what safety stock are they using?
A) 22
B) 4
C) 26
D) 28
E) None of the above

79) The annual demand for a product has
been projected at 2,000 units. This demand is assumed to be constant throughout
the year. The ordering cost is $20 per order, and the holding cost is 20 percent
of the purchase cost. The purchase cost is $40 per unit. There are 250 working
days per year. Whenever an order is placed, it is known that the entire order
will arrive on a truck in 6 days. Currently, the company is ordering 500 units
each time an order is placed. What level of safety stock would give a reorder
point of 60 units?
A) 10
B) 14
C) 18
D) 12
E) 22

80) A person is using the normal
distribution to determine the safety stock for a product. The Z value of 1.65
would be associated with what service level?
A) 90 percent
B) 95 percent
C) 100 percent
D) 92.5 percent
E) None of the above

81) A person is using the normal
distribution to determine the safety stock for a product. The Z value of 2.33
would be associated with what service level?
A) 95 percent
B) 97.5 percent
C) 98 percent
D) 99 percent
E) None of the above

82) Rolf Steps is the production manager
for a local manufacturing firm. This company produces staplers and other items.
The annual demand for a particular stapler is 1,600 units. The holding cost is
$2 per unit per year. The cost of setting up the production line is $25. There
are 200 working days per year. The production rate for this product is 80 per
day. If Rolf decided to produce 200 units each time he started production of
the stapler, what would his maximum inventory level be?
A) 200
B) 180
C) 100
D) 90
E) None of the above

83) Fresh First grocery store purchases
bread at $1 per loaf and sells it at $1.50 a loaf. Any unsold bread is fed to
the geese at a local pond. What is the decision rule?
A) stock an additional unit if P ?
0.33
B) stock an additional unit if P ?
0.4
C) stock an additional unit if P ?
0.5
D) stock an additional unit if P ?
0.67
E) stock an additional unit if P ?
0.75

84) In the ABC analysis of inventory, the
A group items
A) are critical to the functioning of the
organization.
B) are the most expensive class of items.
C) typically account for over 70 percent
of the company’s business in dollars.
D) typically account for about 10 percent
of a company’s inventory items.
E) All of the above

85) Which of the following statements
concerning ABC analysis is false?
A) Class B items typically account for 20
percent of the company’s business in dollars.
B) There are typically less class A items
in stock than class B.
C) Class C items typically account for 70
percent of the company’s inventory items.
D) Class C items tend to have more complex
inventory policies than Class B items.
E) Class B items typically account for 20
percent of the company’s items in inventory.

86) With an annual demand of 2,400 units,
daily demand of 10 units, and daily production rate of 40 units, a company has
determined that each production run will be for 200 units. If production starts
when the inventory level is at zero, how many units would actually be in the
warehouse at the end of the first day of production? (Round your answer to the
nearest unit.)
A) 12
B) 20
C) 30
D) 40
E) None of the above

87) Jack Spratt is the production manager
for a manufacturing firm that produces wizzy-gadgets and other items. The
annual demand for a particular wizzy-gadget is 1,600 units. The holding cost is
$2 per unit per year. The cost of setting up the production line is $25. There
are 200 working days per year. The production rate for this product is 80 per
day. If his maximum inventory level is 180 units, how many units did he produce
each time he started production of the wizzy-gadgets?
A) 200
B) 180
C) 100
D) 90
E) None of the above

88) Rose Arena is the production manager
for a manufacturing firm that produces buggy whips and other items. The annual
demand for a particular buggy whip is 1,600 units. The holding cost is $2 per
unit per year. The cost of setting up the production line is $25. There are 200
working days per year. Rose decided to produce 200 units each time she started
production of the buggy whips. If it took her 4 days to produce the 200 units,
what was her production rate?
A) 80 units/day
B) 60 units/day
C) 50 units/day
D) 100 units/day
E) 40 units/day

89) An organization hosting a 5K race is
looking to sell t-shirts at the event. Demand for t-shirts is believed to be
normally distributed with a mean of 100 and standard deviation of 15. With a
marginal loss of $4 and marginal profit of $5, how many t-shirts should the
organization stock for the 5K race?
A) 98
B) 85
C) 103
D) 115
E) 113

90) Bret’s bakery must decide how many
loaves of fresh bread to produce in a single day. Daily demand for fresh bread
is normally distributed with a mean of 70 loaves and standard deviation of 18.
If the marginal loss is $2 and the marginal profit is $1, how much bread should
Bret’s bakery produce in a single day?
A) 88
B) 52
C) 63
D) 78
E) 70