Question 1

A two-bin inventory system actually requires four physical bins to work.

Accepted Answer

A two-bin inventory system involves two bins, one for current inventory and another for backup inventory. When the current inventory is depleted, the backup inventory bin is used and replenished while production continues from the other bin. Therefore, only two physical bins are necessary for a two-bin inventory system.

Question 2

In the fixed-time period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

Accepted Answer

In the fixed-time period model, the order quantity is typically based on the inventory currently on hand and the expected demand during the ordering period. Therefore, it is necessary to determine the inventory on hand to calculate the order size.

Question 3

When stocked items are sold,the optimal inventory decision using marginal analysis is to stock that quantity where profit from the sale or use of the last unit is equal to or greater than the losses if the last unit remains unsold.

Accepted Answer

This statement is a correct representation of the optimal inventory decision using marginal analysis. It is essential to find the level where the marginal benefit of stocking is equal to the marginal cost of stocking. This ensures that the company does not incur unnecessary losses from unsold goods and maximizes profits by stocking the optimal quantity.

Question 4

If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.

Accepted Answer

This statement is incomplete and incorrect. It's not enough to know that demand is normally distributed and twice the average - we need to know the standard deviation of demand as well to calculate safety stock inventory. Additionally, carrying 2 standard deviations worth of safety stock is not a one-size-fits-all solution and should be determined based on specific factors such as lead time and desired service level.

Question 5

The optimal stocking decision in inventory management,when using marginal analysis,occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

Accepted Answer

The optimal stocking decision in inventory management, using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are equal to the costs for that unit.

Question 6

In a one-bin inventory system the inventory Level is brought up to its predetermined maximum at a fixed time period (such as weekly).

Accepted Answer

In a one-bin inventory system, the inventory level is replenished up to its predetermined maximum at a fixed time period, such as weekly.

Question 7

Which of the following is one of the categories of manufacturing inventory?

Accepted Answer

Work-in-process is one of the main categories of manufacturing inventory, referring to products that are currently being produced but have not yet been completed. Economic Order Inventory, JIT Inventory, Quality units and Re-order point are all inventory management strategies or concepts, but not categories of manufacturing inventory.

Question 8

The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.

Accepted Answer

The standard fixed-time period model assumes that inventory is counted at fixed intervals and orders are placed to bring inventory levels up to a predetermined level, rather than being determined solely by EOQ measures.

Question 9

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

Accepted Answer

This is true. Some inventory situations only require ordering to cover one demand period or short-lived items that need frequent ordering.

Question 10

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Accepted Answer

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Question 11

Safety stock is not necessary in any fixed-time period system.

Accepted Answer

Safety stock is necessary in any inventory system to buffer against demand and supply variability. A fixed-time period system is no exception, as it still faces the same uncertainties in demand and supply as any other system.

Question 12

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Accepted Answer

Fixed-order quantity systems trigger an immediate order, not a delayed one, when inventory reaches a predetermined reorder point, assuming a constant and known quantity to be reordered.

Question 13

Fixed-time period inventory models generate order quantities that vary from time period to time period,depending on the usage rate.

Accepted Answer

Fixed-time period inventory models use a set time period for ordering, but the order quantity may vary depending on the demand or usage rate during that time period.

Question 14

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service Level or probability by the standard deviation of daily demand.

Accepted Answer

The answer of Safety stock can be computed when using...

Question 15

The key difference between a fixed-order quantity inventory model where demand is known and one where demand is uncertain is in computing the reorder point.

Accepted Answer

In a fixed-order quantity inventory model with known demand, the reorder point can be calculated directly by multiplying the lead time with the demand during lead time. However, in a model where demand is uncertain, the reorder point needs to be adjusted to consider different levels of demand variability and safety stock.

Question 16

Which of the following is not one of the categories of manufacturing inventory?

Accepted Answer

Just-in-time is a production strategy, not a category of manufacturing inventory. Raw materials, component parts, finished products, and supplies are all categories of manufacturing inventory.

Question 17

A one-bin system of inventory involves periodic replenishment no matter how few inventory items are needed.

Accepted Answer

In a one-bin system, the inventory is replenished at a predetermined time interval, regardless of how much inventory is needed. This helps to simplify the ordering process and reduce stockouts.

Question 18

In a two-bin system for inventory,items are used from one bin and the second bin provides a large enough amount to ensure that the stock can be replenished before running out.

Accepted Answer

This is the basic concept of a two-bin system for inventory management. The first bin is used until it runs out, and then the second bin provides enough inventory to restock the first bin before it is completely depleted. This ensures that there is always enough inventory on hand to meet demand while reducing the risk of stockouts or overstocking.

Question 19

The "sawtooth effect",named after turn-around artist Al "chainsaw" Dunlap is the severe reduction of inventory and service Levels that occurs when a firm has gone through a hostile takeover.

Accepted Answer

The sawtooth effect is not specifically related to hostile takeovers or Al "chainsaw" Dunlap. It refers to the regular fluctuations in inventory and service levels that occur as a result of order cycles in a supply chain.

Question 20

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service Level or probability by the standard deviation of lead time.

Accepted Answer

This is correct. The safety stock formula for the fixed-order quantity inventory model is: Safety stock = z * standard deviation of lead time. The "z" value is determined based on the desired service level or probability of not running out of inventory during lead time.

Quiz 17: Inventory Control

A two-bin inventory system actually requires four physical bins to work.

In the fixed-time period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

When stocked items are sold,the optimal inventory decision using marginal analysis is to stock that quantity where profit from the sale or use of the last unit is equal to or greater than the losses if the last unit remains unsold.

If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.

The optimal stocking decision in inventory management,when using marginal analysis,occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

In a one-bin inventory system the inventory Level is brought up to its predetermined maximum at a fixed time period (such as weekly).

Which of the following is one of the categories of manufacturing inventory?

The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Safety stock is not necessary in any fixed-time period system.

Fixed-order quantity systems assume a random depletion of inventory,with less than an immediate order when a reorder point is reached.

Fixed-time period inventory models generate order quantities that vary from time period to time period,depending on the usage rate.

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service Level or probability by the standard deviation of daily demand.

The key difference between a fixed-order quantity inventory model where demand is known and one where demand is uncertain is in computing the reorder point.

Which of the following is not one of the categories of manufacturing inventory?

A one-bin system of inventory involves periodic replenishment no matter how few inventory items are needed.

In a two-bin system for inventory,items are used from one bin and the second bin provides a large enough amount to ensure that the stock can be replenished before running out.

The "sawtooth effect",named after turn-around artist Al "chainsaw" Dunlap is the severe reduction of inventory and service Levels that occurs when a firm has gone through a hostile takeover.

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service Level or probability by the standard deviation of lead time.