Question 1

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120,124,and 125,which of the following is the standard deviation of usage during lead time?

Accepted Answer

The answer of If it takes a supplier two days...

Question 2

company wants to determine its reorder point (R).Demand is variable and they want to build a safety stock into R.If the average daily demand is 12,the lead time is 5 days,the desired "z" value is 1.96,and the standard deviation of usage during lead time is 3,which of the following is the desired value of R?

Accepted Answer

The reorder point (R) is calculated as: R = (Average daily demand * Lead time) + (z * Standard deviation of usage during lead time). So, R = (12 * 5) + (1.96 * 3) = 60 + 5.88 ≈ 66.

Question 3

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

Accepted Answer

The answer of Which of the following are the recommended...

Question 4

The Pareto principle is best applied to which of the following inventory systems?

Accepted Answer

The Pareto principle, also known as the 80/20 rule, suggests that 80% of the effects come from 20% of the causes. In inventory management, this can be applied to the ABC classification system, where items are categorized based on their importance and value to the business. The top 20% of items, which account for 80% of the inventory value, are given the highest priority in terms of monitoring and control. Therefore, the Pareto principle is best applied to the ABC classification system.

Question 5

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

Accepted Answer

The answer of Computer inventory systems are often programmed to...

Question 6

Using the fixed-time period inventory model,and given an average daily demand of 200 units,4 days between inventory reviews,5 days for lead time,120 units of inventory on hand,a "z" of 1.96,and a standard deviation of demand over the review and lead time of 3 units,which of the following is the order quantity?

Accepted Answer

First we need to calculate the maximum amount of units sold during the review and lead time period. This can be done by multiplying the average daily demand by the number of days between inventory reviews and adding the lead time demand:

(200 units/day) x (4 days) + (200 units/day) x (5 days) = 1800 units

Next, we need to calculate the safety stock, which is the inventory buffer needed to account for demand variation during the review and lead time period. This can be calculated by multiplying the standard deviation by the z-value:

3 units x 1.96 = 5.88 units

We then add the safety stock to the maximum amount sold during the review and lead time period:

1800 units + 5.88 units = 1805.88 units

Finally, we subtract the current inventory on hand from the total inventory needed to get the order quantity:

1805.88 units - 120 units = 1685.88 units

Therefore, the order quantity is about 1,686 units, which is option B.

Question 7

Using the fixed-time period inventory model,and given an average daily demand of 75 units,10 days between inventory reviews,2 days for lead time,50 units of inventory on hand,a service probability of 95 percent,and a standard deviation of demand over the review and lead time of 8 units,which of the following is the order quantity?

Accepted Answer

The answer of Using the fixed-time period inventory model,and given...

Question 8

Using the fixed-time period inventory model,and given an average daily demand of 15 units,3 days between inventory reviews,1 day for lead time,30 units of inventory on hand,a service probability of 98 percent,and a standard deviation of daily demand is 3 units,which of the following is the order quantity?

Accepted Answer

The formula for order quantity in fixed-time period inventory model is:

Order Quantity = Average Daily Demand x (Review Period + Lead Time) + Safety Stock

Safety stock = z-score x Standard Deviation of Daily Demand x Square Root of (Review Period + Lead Time)

Where z-score for 98% service probability is 2.33

Plugging in the given values:

Order Quantity = 15 x (3+1) + 2.33 x 3 x sqrt(3+1) 
Order Quantity = 60 + 13.2 
Order Quantity ≈ 73.2

Since we currently have 30 units of inventory on hand, we only need to order 73.2 - 30 = 43.2 units to reach our target inventory level.

The possible answer choices are not exactly matching, but option C is the closest at about 42.3 units, so it is the best choice.

Question 9

Using the ABC classification system for inventory,which of the following is a true statement?

Accepted Answer

In the ABC classification system, "A" items are of high dollar volume, "B" items are of moderate dollar volume, and "C" items are of low dollar volume. Therefore, option D is the true statement. Option A is incorrect as "C" items are of low dollar volume, not moderate. Option B is not accurate as the percentage allocation varies depending on the specific inventory and industry. Option E is partially correct in that inexpensive and low usage items are often classified as "C," but criticality can also be a factor in determining ABC classification.

Question 10

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

Accepted Answer

Cycle count notices are often triggered when there is a discrepancy, such as a positive balance on record but a backorder, indicating a potential issue with inventory accuracy.

Question 11

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem),and the profit resulting from the last unit being sold (C_u)is $120 and the loss resulting from that unit if it is not sold (C_o)is $360,which of the following is the probability of the last unit being sold?

Accepted Answer

The answer of If a vendor has correctly used marginal...

Question 12

What is the basic purpose of inventory analysis?

Accepted Answer

The answer of What is the basic purpose of inventory...

Question 13

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company.You know that vendor lead time is 5 days and the number of days between reviews is 7.Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?

Accepted Answer

The standard deviation of demand over the review and lead time can be calculated using the square root of the sum of the squares of the daily demand standard deviations over the total period (review period + lead time). Here, the total period is 7 days (review) + 5 days (lead time) = 12 days. The formula is: sqrt(12) * 8 = 34.64. The closest answer to this calculation is about 27.7.

Question 14

ABC inventory classification schemes divide inventory items into three groupings.What are these groupings usually based upon?

Accepted Answer

The answer of ABC inventory classification schemes divide inventory items...

Question 15

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

Accepted Answer

The standard deviation of usage during lead time can be calculated using the formula: 
Standard deviation of usage during lead time = Standard deviation of daily demand * Square root of lead time 
= 20 * Square root of 25 
= 20 * 5 
= 100 
Therefore, the standard deviation of usage during lead time is 100.

Question 16

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

Accepted Answer

The answer of Which of the following values for "z"...

Question 17

The 80-20 rule,that is the logic of the few having the greatest importance and the many having little importance has been broadened to include inventory situations.The term often used to refer to this logic is called what?

Accepted Answer

The 80-20 rule is also known as the Pareto principle, which states that 80% of the effects come from 20% of the causes. It is often applied to inventory management, where 80% of the sales come from 20% of the products, and therefore, it is important to focus on managing and replenishing that top 20% of products to ensure efficient inventory management.

Question 18

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem),and the profit resulting from the last unit being sold (C_u)is $0.90 and the loss resulting from that unit if it is not sold (C_o)is $0.50,which of the following is the probability of the last unit being sold?

Accepted Answer

The answer of If a vendor has correctly used marginal...

Question 19

company wants to determine its reorder point (R).Demand is variable and they want to build a safety stock into R.The company wants to have a service probability coverage of 95 percent.If average daily demand is 8,lead time is 3 days,and the standard deviation of usage during lead time is 2,which of the following is the desired value of R?

Accepted Answer

The answer of company wants to determine its reorder point...

Question 20

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company.You know that vendor lead time is 10 days and the number of days between reviews is 15.Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10?

Accepted Answer

Standard deviation over the review and lead time period can be calculated as follows:

σ_(RL )=σ_d √(RL )=10√(15+10)=10√25=10×5=50

where 
σd = standard deviation of daily demand
RL = review period + lead time

Therefore, the standard deviation of demand over the review and lead time period is 50.

Quiz 11: Inventory Management

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120,124,and 125,which of the following is the standard deviation of usage during lead time?

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products?

The Pareto principle is best applied to which of the following inventory systems?

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

Using the ABC classification system for inventory,which of the following is a true statement?

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

What is the basic purpose of inventory analysis?

ABC inventory classification schemes divide inventory items into three groupings.What are these groupings usually based upon?

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20,which of the following is the standard deviation of usage during lead time?

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%?

The 80-20 rule,that is the logic of the few having the greatest importance and the many having little importance has been broadened to include inventory situations.The term often used to refer to this logic is called what?