Deck 11: Independent Demand Ordering Systems

Question 1

Variable or dynamic information changes with each transaction and includes:

A) quantities ordered
B) quantities issues
C) quantities received
D) all of the above

Answer 1

D

Question 2

What is the purpose of safety stock?

Answer 2

Safety stock is intended to protect against uncertainty in supply and demand.
Uncertainty may occur in two ways: quantity uncertainty and timing uncertainty. Carrying extra stock or safety stock is a way to protect against uncertainty along with ordering early.

Question 3

The cost of stockout varies depending on:

A) customer and competition
B) the market served
C) the item
D) all of the above

Answer 3

D

Question 4

Order quantity is 1,000 units and safety stock is 300 units. What is the average annual inventory?

Question 5

An objective of a distribution inventory management system is:

A) to provide the required level of customer service
B) to maximize handling costs
C) to maximize transportation costs
D) to limit interaction with the factory

Question 6

The advantage of a centralized system is:

A) lower service levels
B) inability to reach to local demand
C) coordination between factory, central supply, and distribution center needs
D) coordination between factory and central supply

Question 7

The two- bin system is a simple way of keeping control of____________ items because they are of low value.

A) A
B) B
C) C
D) D

Question 8

Permanent or static inventory includes data such as:

A) lead time and safety stock
B) order point and quantity
C) part number, name, and description
D) all of the above

Question 9

What is the service level and what does it mean?

Question 10

In a centralized system:

A) stock is pulled into the system from marketing
B) forecasting is decentralized by department
C) an attempt is made to replace the stock that has been sold and to provide for special situations
D) distribution centers are involved in determining what they receive

Question 11

Distribution inventory management systems can be classified as:

A) decentralized and centralized
B) decentralized and DRP
C) decentralized, centralized and DRP
D) centralized and DRP

Question 12

Given the following actual demands for a 10- week period, calculate the average x- bar of the distribution.

Question 13

In the order point system, an order is placed when:

A) the quantity on hand falls to a predetermined order point
B) the quantity on hand rises to a predetermined order point
C) neither A nor B
D) both A and B

Question 14

What is distribution requirements planning?

Question 15

Planned order releases from the various distribution centers become the ________to the material plan of central supply in DRP.

A) by product
B) output
C) input
D) product

Question 16

Demand is 200 units a week, the lead time is 3 weeks, and safety stock is 300 units. Calculate the order point.

Question 17

The forecast interval is 4 weeks and the lead time interval is 2 weeks. Sigma for the forecast interval is 150 units. Calculate the standard deviation for the lead time interval.

Question 18

The kanban system is a simply system that signals the need for less product.

Question 19

Why do stickouts cost money?

Question 20

Describe how the standard deviation is calculated.

Question 21

Materials requirements planning is a system that forecasts when the various demands will be mady by the system on central supply.

Question 22

The decentralized system is sometimes called the pull system because orders are placed on central supply and "pulled" through the system.

Question 23

Unless a firm delivery directory from factory to customer demand n the factory is created by central supply.

Question 24

In a centralized system, each distribution center first determines what it needs and when, and then places orders in central supply.

Question 25

Distribution inventory includes all the finished goods held anywhere in the distribution system.

Question 26

An inventory record contains variable and permanent information.

Question 27

The advantage of the decentralized system is that each center can operate on its own and thus reduce communication and coordination expense.

Question 28

The quantity equal to the demand during the lead time plus the demand during the review period plus safety stock is called the target level or maximum- level inventory.

Question 29

The purpose of holding inventory in distribution centers is to improve customer service by locating stock away from the customer and to increase transportation costs.