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Operations Management Final Study

In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.
True
One function of inventory is to take advantage of quantity discounts
True
ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.
False
Gross material requirements do not take into account the amount of inventory on hand.
True
The master production schedule is a forecast of demand for families of products
False
A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
True
The use of part-time workers as an aggregate planning option may be less costly than using full-time workers, but may also reduce quality levels
True
The reorder point is the inventory level at which action is taken to replenish the stocked item.
True
In general, the lot-for-lot approach should be used whenever economical
True
Because service firms do not inventory their output, pure chase strategy is not appropriate.
False
Which of the following statements regarding aggregate planning in services is false?
A) Labor is the primary aggregate planning vehicle.
B) Perishability of inventory is an important consideration of planning.
C) Aggregate planning in some service industries can be simpler than in manufacturing.
D) Level scheduling is far more common than chase.
E) When outputs are intangible, aggregate planning deals mainly with human resources
requirements and managing demand.
Level scheduling is far more common than chase
Disaggregation
A) transforms the master production schedule into an aggregate plan
B) is an assumption required for the use of the transportation model in aggregate planning
C) breaks the aggregate plan into greater detail
D) calculates the optimal price points for yield management
E) converts product schedules and labor assignments to a facility-wide plan
breaks the aggregate plan into greater detail
Demand for a given item is said to be dependent if
A) the finished products are mostly services (rather than goods)
B) there is a deep bill of material
C) the item has several children
D) it originates from the external customer
E) there is a clearly identifiable parent
there is a clear identifiable parent
ABC analysis is based upon the principle that
A) an item is critical if its usage is high
B) there are usually a few critical items, and many items which are less critical
C) more time should be spent on class “C” items because there are more of them
D) all items in inventory must be monitored very closely
E) an item is critical if its unit price is high
there are usually a few critical items, and many items which are less critical
If demand is not uniform and constant, then stockout risks can be controlled by
A) reducing the reorder point
B) adding safety stock
C) increasing the EOQ
D) placing an extra order
E) raising the selling price to reduce demand
adding safety stock
Which of the following statements about aggregate planning is true?
A) Aggregate planning uses the adjustable part of capacity to meet production requirements.
B) Work station loading and job assignments are examples of aggregate planning.
C) Overtime/idle time is a way of manipulating product or service demand.
D) Advertising/promotion is a way of manipulating product or service supply.
E) All of the above are true.
aggregate planning uses the adjustable part of capacity to meet production requirements
The EOQ model with quantity discounts attempts to determine
A) how many units should be ordered
B) what is the lowest amount of inventory necessary to satisfy a certain service level
C) what is the shortest lead time
D) what is the lowest purchasing price
E) whether to use fixed-quantity or fixed-period order policy
how many units should be ordered
Which of the following is a function of inventory?
A) to take advantage of quantity discounts
B) to decouple or separate parts of the production process
C) to decouple the firm from fluctuations in demand and provide a stock of goods that will
provide a selection for customers
D) to hedge against inflation
E) All of the above are functions of inventory.
all of the above are functions of inventory
A master production schedule specifies
A) the raw materials required to complete the product
B) the labor hours required for production
C) what component is to be made, and when
D) the financial resources required for production
E) what product is to be made, and when
what product is to be made, and when
Which of the following best describes a gross material requirements plan?
A) a table that corrects scheduled quantities for inventory on hand
B) a chart illustrating whether capacity has been exceeded
C) a schedule that shows total demand for an item, and when it must be ordered from a supplier
or when production must be started
D) a schedule showing which products are to be manufactured and in what quantities
E) an intermediate range plan for the scheduling of families of products
a schedule that shows total demand for an item and when it must be ordered from a supplier or when production must be started
What lot-sizing technique is generally preferred when inventory holding costs are extremely high?
A) EOQ
B) part-period balancing
C) the Wagner-Whitin algorithm
D) lot-for-lot
E) All of the above are appropriate for the situation.
lot-for-lot
The ________ is the input to material requirements planning which lists the assemblies,
subassemblies, parts, and raw materials needed to produce one unit of finished product.
A) bill of material
B) net requirements chart
C) master production schedule
D) assembly time chart
E) inventory records
bill of material
23) In level scheduling, what is kept uniform from month to month?
A) product mix
B) production/workforce levels
C) sub-contracting levels
D) inventory levels
E) demand levels
production/workforce levels
Which of the following statements about the basic EOQ model is false?
A) If annual demand were to double, the EOQ would also double.
B) If the setup cost were to decrease, the EOQ would fall.
C) If the ordering cost were to increase, the EOQ would rise.
D) If annual demand were to increase, the EOQ would increase.
E) All of the above statements are true.
if annual demand were to double, the EOQ would also double
Which of the following actions is consistent with the use of pure level strategy?
A) vary the amount of subcontracting to meet demand requirements
B) use inventory to meet demand requirements
C) vary production levels to meet demand requirements
D) vary work force to meet demand requirements
E) none of the above
use inventory to meet demand requirements
Productivity is more difficult to improve in the service sector.
True
Which of the following is not a typical service attribute?
a. intangible product
b. simultaneous production and consumption
c. easy to store
d. customer interaction is high
e. difficult to resell
easy to store
Productivity is the total value of all inputs to the transformation process divided by the total value of the outputs produced
False
Productivity can be improved by
a. decreasing inputs while holding outputs steady
b. increasing inputs while holding outputs steady
c. increasing inputs and outputs in the same proportion
d. decreasing outputs while holding inputs steady
e. none of the above
decreasing inputs while holding outputs steady
Productivity tends to be more difficult to improve in the service sector because the work is
a. often more difficult to automate
b. typically labor-intensive
c. often an intellectual task performed by professionals
d. frequently processed individually
e. all of the above make service productivity more difficult
all of the above make service productivity more difficult
The Ten Critical Decisions of Operations Management include
a. process and capacity design
b. finance/accounting
c. advertising
d. pricing
e. all of the above
process and capacity design
Which of the following are the primary functions of all organizations?
a. marketing, human resources, and finance/accounting
b. sales, quality control, and production/operations
c. research and development, finance/accounting, and purchasing
d. production/operations, marketing, and human resources
e. marketing, production/operations, and finance/accounting
marketing, production/operations, and finance/accounting
All organizations, including service firms such as banks and hospitals, have a production function.
True
Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs
True
The operations manager performs the management activities of planning, organizing, staffing, leading and controlling of the OM function.
True
Which of the following attributes is most typical of a service?
a. mass production
b. tangible
c. consistency
d. easy to automate
e. production and consumption occur simultaneously
production and consumption occur simultaneously
All of the following decisions fall within the same scope of operations management except for
a. managing quality
b. creating the company income statement
c. design of goods and processes
d. location of facilities
e. all of the above fall within the scope of operations management
creating the company income statement
Which of the following is not an element of the management process?
a. staffing
b. planning
c. pricing
d. controlling
e. leading
pricing
Operations management is applicable
a. to all firms, whether manufacturing or service
b. mostly to the manufacturing sector
c. to the manufacturing sector exclusively
d. mostly to the service sector
e. to services exclusively
to all firms, whether manufacturing or service
Customer interaction is often high for manufacturing processes, but low for services
False
Which of the following is a similarity between goods and services?
a. automation
b. mass production
c. consistency
d. application of operations management
e. all of the above
application of operations management
Which is not true regarding differences between goods and services?
a. services tend to have a more inconsistent product definition than goods
b. tangible goods are generally produced and consumed simultaneously; services are not
c. most goods are common to many customers; services are often unique to the final customer
d. services tend to have high customer interaction than goods
e. all of the above are true
tangible goods are generally produced and consumed simultaneously; services are not
The total of all outputs produced by the transformation process divided by the total of the inputs is
a. multifactor productivity
b. defined only for manufacturing firms
c. utilization
d. greater in manufacturing than in services
e. none of the above
multifactor productivity
Which productivity variable has the greatest potential to increase productivity?
a. labor
b. management
c. globalization
d. capital
e. none of the above
management
Reasons to study Operations Management include learning about
a. how goods and services are produced
b. a costly part of the enterprise
c. how people organize themselves for productive enterprise
d. what operations manager do
e. all of the above
all of the above
Which of the following statements best characterizes delivery reliability?
a. a company that delivers faster than its competitors
b. a company that has a computerized delivery scheduling system
c. a company that delivers more frequently than its competitors
d. a company that always delivers on the same day of the week
e. a company that always delivers at the promised time
a company that always delivers at the promised time
A strategy is
a. a plan for cost reduction
b. an action plan to achieve the mission
c. a broad statement of purpose
d. a simulation used to test various product line options
e. a set of opportunities in the marketplace
an action plan to achieve the mission
Which of these organizations is likely to have the most important inventory decisions?
a. a management consulting firm
b. a lobbying agency
c. a law firm
d. an aluminum manufacturer
e. a marketing research firm
an aluminum manufacturer
The fundamental purpose of an organization’s mission statement is to
a. define the operational structure of the organization
b. generate good public relations for the organization
c. create a good human relations climate in the organization
d. define the organization’s purpose in society
e. define the functional areas required by the organization
define the organization’s purpose in society
Which of the following is true?
a. functional area missions are merged to become the organizational mission
b. external conditions are shaped by corporate mission
c. functional strategies are shaped by corporate strategy
d. corporation mission is shaped by functional strategies
e. corporate strategy is shaped by functional strategies
functional strategies are shaped by corporate strategy
Which of the following will more likely locate near their customers?
a. an automobile manufacturer
b. an aluminum manufacturer
c. a medical clinic
d. an insurance company headquarters
e. all of the above will tend to locate near their customers
a medical clinic
Which of the following is an example of competing on the basis of differentiation?
a. a firm’s products are introduced into the market faster than its competitors’ products are
b. a firm offers more reliable products than its competitors do
c. a firm advertises more than its competitors do
d. a firm manufacturers its product with less raw material waste than its competitors do
e. a firm’s distribution network routinely delivers its product on time
a firm offers more reliable products than its competitors do
c. a firm advertises more than its competitors do
For the greatest change of success, an organization’s operations management strategy must support the company’s strategy.
True
Which of the following is not an operations strategic decision?
a. price
b. layout design
c. maintenance
d. inventory
e. quality
price
Which of the following does not represent a reason for globalizing operations?
a. improve the supply chain
b. reduce responsiveness
c. reduce costs
d. attract and retain global talent
e. none of the above are valid reasons for globalizing operations
reduce responsiveness
To attract and retain global talent, and to expand a product’s life cycle, are both reasons to globalize
True
One reason for global operations is to gain improvements in the supply chain
True
A product will always be in the same stage of its product life cycle regardless of the country
False
Porter’s Five Forces Model is used to evaluate competition based on which 5 aspects?
a. immediate rivals, potential entrants, customers, suppliers, and substitute products
b. potential entrants, customers, suppliers, legal regulations, and cost
c. research and development, cost, legal regulations, suppliers, customers
d. immediate rivals, potential entrants, cost, substitute products, and legal regulations
e. none of the above
immediate rivals, potential entrants, customers, suppliers, and substitute products
Cost minimization is an appropriate strategy in which stage of the product life cycle?
a. growth
b. adolescence
c. retirement
d. introduction
e. decline
decline
Low-cost leadership is the ability to distinguish the offerings of the organization in any way that the customer perceives as adding value
False
Operations strategies are implemented in the same way in all types of organizations
False
Which of the following is the best example of competing on low-cost leadership?
a. a firm’s products are introduced into the market faster than its competitors’ products
b. a firm’s research and development department generates many ideas for new products
c. a firm produces its product with less raw material waste than its competitors
d. a firm offers more reliable products than its competitors
e. a firm advertises more than its competitors
a firm produces its product with less raw material waste than its competitors
One reason to globalize is to learn to improve operations
True
When developing the operations strategy for a new manufacturing organization, one of the most important considerations is that it
a. utilizes as much automation as possible
b. utilizes an equal balance of labor and automation
c. supports the overall competitive strategy of the company
d. requires minimal capital investment
e. none of the above
supports the overall competitive strategy of the company
A characteristic of JIT Partnerships with respect to quality is to
a. maintain a steady output rate
b. help suppliers meet quality requirement
c. draw up strict contracts ensuring that all defectives will be immediately replaced
d. inspect all incoming parts
e. impose maximum product specifications on the supplier
help suppliers meet quality requirement
Which of the following statements regarding JIT in services is true?
a. scheduling is not relevant to effective use of JIT in services
b. restaurants do not use JIT layouts because they interfere with creation of good servicescape
c. excess customer demand in services such as air travel is met by dipping into safety stocks
d. all of the JIT techniques for dealing with suppliers, layouts, inventory, and scheduling are used in services
e. all of the above are false
all of the JIT techniques for dealing with suppliers, layouts, inventory, and scheduling are used in services
Which of the following is characteristic of lean operations?
a. long lead times
b. easy, mindless jobs
c. no supplier partnerships
d. low space requirements
e. specialty workers with no cross-training
low space requirements
Hidden problems are generally uncovered during the process of reducing inventory
True
If a casual dining restaurant is attempting to practice JIT and lean operations, which of the following would not be present?
a. food preparation in large batches
b. close relationship with the restaurant’s suppliers of food, utensils, and equipment
c. a kitchen set up to minimize wasteful movements
d. lean inventories of food
e. all of the above should be present
food preparation in large batches
Product storage is an example of waste, in the sense that no value is added
True
Reduction of in transit inventory can be encouraged through use of
a. supplier location near plants
b. low-cost, global suppliers
c. use of trains, not trucks
d. low carrying costs
e. low setup costs
supplier location near plants
Waste is anything that does not add value, such as storage or inspection of items; waste also includes any activity that does not add value from the consumer’s perspective
True
Which of the following is a characteristic of a JIT partnership?
a. active pursuit of vertical integration
b. frequent deliveries in large lot quantities
c. removal of income inspection
d. maximal product specifications imposed on supplier
e. larger number of suppliers
removal of income inspection
Which of the following statements is true regarding JIT inventory?
a. it is the minimum inventory necessary to keep a perfect system running
b. it is minimized with large lot production
c. it hides variability
d. it increases if setup costs decrease
e. it exists just in case something goes wrong
it is the minimum inventory necessary to keep a perfect system running
Which of the following is specifically characterized by continuous and forced problem solving through a focus on throughput and reduce inventory?
a. material requirements planning (MRP)
b. Toyota Production System (TPS)
c. kanban
d. Just-in-time (JIT)
e. lean operations
Just-in-time (JIT)
A manufacturer took the following actions to reduce inventory. Which of these is generally not accepted as a JIT action?
a. It used a pull system to move inventory
b. it picked the supplier that offered the lowest price based on quantity discounts
c. it required deliveries directly to the point of use
d. it produced in ever smaller lots
e. it worked to reduce the company’s in-transit inventory
it picked the supplier that offered the lowest price based on quantity discounts
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices?
a. just in time (JIT)
b. toyota production system (TPS)
c. kanban
d. material requirements planning (MRP)
e. lean operations
toyota production system (TPS)
Which of the following is not characteristic of a TPS employee?
a. know more about their job than anyone else
b. strict job classifications
c. knowledgeable
d. empowered
e. all of the above characterize a TPS employee
strict job classifications
A push system means providing the next station with exactly what is needed when it is needed
False
Concerning the relationships with suppliers, which of the following combinations is critical to the success of JIT?
a. distant relationships with trust
b. close relationships with skepticism
c. distant relationships with skepticism
d. close relationships with trust
e. none of the above
close relationships with trust
Excess bags of basic commodities such as flour and sugar that are stored in a restaurant’s kitchen represent which of the following wastes?
a. queues
b. defective product
c. inventory
d. transportation
e. overproduction
inventory
TPS stands for Toyota production system
True
Reducing distance is a common JIT goal
True
What is the time required to move orders through the production process, from receipt to delivery?
a. throughput
b. manufacturing cycle time
c. push time
d. pull time
e. queuing time
throughput
What is the practice of moving a business process to a foreign country but retaining control of it?
a. exporting
b. farshoring
c. backsourcing
d. offshoring
e. outsourcing
offshoring
Which of the following is not true regarding core competencies?
a. they may represent a small portion of an organization’s business activities
b. they may include specialized knowledge
c. they may include proprietary technology or information
d. they may be good candidates for outsourcing
e. they may include unique production methods
they may be good candidates for outsourcing
A company that had previously sent its call center business to India has now brought that business back to small towns in the US such as Dubuque, Iowa. This is an example of
a. backsourcing
b. inshoring
c. offshoring
d. return outsourcing
e. outsourcing
backsourcing
Outsourcing has expanded to become a major strategy in business due to the continuing move toward specialization in an increasingly technological society
True
Outsourcing is the practice of procuring from external sources services or products that are normally part of an organization
True
Outsourcing is simply an extension of the long-standing practice of
a. exporting
b. postponement
c. importing
d. e-procurement
e. subcontracting
subcontracting
The decline in customer satisfaction for outsourced call centers highlights which aspect of outsourcing risk?
a. technological
b. quality
c. cost
d. core competency
e. erratic utility functionality
quality
Nearly any business activity can be outsourced
True
The factor-rating method is an excellent tool for dealing with both country risk assessment and source provider selection problems
True
Research data suggest that foreigners outsource far more services to the US than American companies send abroad
True
What is the practice of procuring form external source services or products that are normally part of an organization?
a. backsourcing
b. nearshoring
c. outsourcing
d. farshoring
e. offshoring
outsourcing
The theory of comparative advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can
True
Some organizations use outsourcing to replace entire purchasing, information systems, marketing, finance and operations departments
True
Outsourcing is the practice of moving a business process to a foreign country but retaining control of it
False
An organization’s unique skills, talents and capabilities are referred to as its core competencies
True
Advantages of outsourcing do not include
a. renewed focus on core competencies
b. creating future competition
c. gaining outside technologies
d. outside expertise
e. cost savings
creating future competition
Which of the following is the number-one reason driving outsourcing for many firms?
a. focusing on core competencies
b. gaining outside technology
c. improving operations and service
d. cost savings
e. gaining outside expertise
cost savings
Which of the following statements is most accurate?
a. nearly all US firms that outsourced processes to India have backsourced them
b. outsourcing is a relatively risk-free activity
c. approximately half of all outsourcing agreements fail
d. nearly all outsourcing relationships do not last beyond two years
e. more than 90% of outsourcing agreements succeed
approximately half of all outsourcing agreements fail
the practice of choosing an external provider in the home country or in a nearby country is referred to as
a. nearshoring
b. homesourcing
c. homeshoring
d. nearsourcing
e. backsourcing
nearshoring
Some business activities, such as human resources and legal processes, cannot be outsourced
False
Which of the following performance measures is not true of a world class firm?
a. short time placing an order
b. low number of shortages per year
c. high percentage of on-time deliveries
d. large lead time
e. high percentage of accepted material
large lead time
Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors
True
Outsourcing refers to transferring a firm’s activities that have traditionally been internal or external suppliers
True
Which of the following statements about purchasing is true?
a. competitive bidding is a major factor in long term cost reductions
b. purchasing is always more efficient than making an item
c. the cost of purchasers as a percent of sales is often small
d. purchasing has an impact on the quality of the goods and services sold
e. purchasing provides a major opportunity for price increases
purchasing has an impact on the quality of the goods and services sold
The key to effective supply chain management is to get many suppliers to compete with each other, in order to drive down prices
False
Which of the following is not an advantage of a virtual company?
a. speed
b. low capital investment
c. specialized management expertise
d. total control over every aspect of the organization
e. flexibility
total control over every aspect of the organization
The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans
False
A fried chicken fast food chain that acquired feed mills and poultry farms has performed
a. backward integration
b. job expansion
c. current transformation
d. horizontal integration
e. forward integration
backward integration
Benchmark firms have driven down costs of supply-chain performance
True
A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing
a. float reduction
b. passing the buck
c. drop shipping
d. channel assembly
e. postponement
drop shipping
The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally
True
which of the following supply-chain strategies creates value by allowing suppliers to have economics of scale?
a. long term partnering with a few suppliers
b. vertical integration
c. negotiating with many suppliers
d. suppliers becoming part of a company coalition
e. developing virtual companies
long term partnering with a few suppliers
which of the following is not a concern of the supply chain?
a. warehousing and inventory levels
b. distributors and banks
c. credit and cash transfers
d. maintenance scheduling
e. suppliers
maintenance scheduling
One dollar saved in purchasing is
a. equivalent to a dollar earned in sales revenue
b. worth even more than a dollar earned in sales revenue
c. worth from 35% in the technical instrument industry to 70% in the food products industry
d. worth slightly more than a dollar earned because of taxes
e. only worthwhile if you are in the 50% tax bracket and still have a low profit margin
worth even more than a dollar earned in sales revenue
Vendor-Managed inventory is a form of outsourcing
True
A rice mill in south Lousiana purchases the trucking firm that transports packaged rice to distributors. This an example of
a. keiretsu
b. backward integration
c. forward integration
d. horizontal integration
e. current transformation
forward integration
the three stages of vendor selection, in order, are
a. vendor development, vendor evaluation, and vendor acquisition
b. EDI, ERP, and ASN
c. vendor evaluation, vendor development and negotiations
d. vendor evaluation, negotiations, and vendor development
e. introduction, growth and maturity
vendor evaluation, vendor development and negotiations
A disadvantage of the “few suppliers” strategy is
a. the lack of cost savings for customers and suppliers
b. the high cost of changing partners
c. the risk of not being ready for technological change
d. possible violations of the Sherman Antitrust Act
e. all of the above are disadvantages of the “few suppliers” strategy
the high cost of changing partners
which of the following is not a supply chain strategy?
a. short-term relationships with few suppliers
b. vertical integration
c. keiretsu
d. virtual companies
e. negotiation with many suppliers
short-term relationships with few suppliers
Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of
a. timely customization
b. standardization
c. postponement
d. vendor managed inventory
e. backward integration
postponement
Which of the following is not one of the four main types of inventory?
a. raw material inventory
b. work in process inventory
c. safety stock inventory
d. maintenance/repair/operating supply inventory
e. all of these are main types of inventory
safety stock inventory
Q* = 2DS/H (SquareRoot)
The primary purpose of the basic economic order quantity model shown above is
a. to calculate the reorder point, so that replenishments take place at the proper time
b. to maximize the customer service level
c. to minimize the sum of setup cost and holding cost
d. to minimize the sum of carrying cost and holding cost
e. to calculate the optimum safety stock
to minimize the sum of setup cost and holding cost
Which of the following is a function of inventory?
a. to hedge against inflation
b. to decouple or separate parts of the production process
c. to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers
d. to take advantage of quantity discounts
e. all of the above are functions of inventory
all of the above are functions of inventory
In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.
False
Cycle counting
a. provides a measure of inventory accuracy
b. assumes that the most frequently used items must be counted more frequently
c. is a process by which inventory records are verified once a year
d. provides a measure of inventory turnover
e. assumes that all inventory records must be verified with the same frequency
provides a measure of inventory accuracy
Which of the following is an element of inventory holding costs?
a. housing costs
b. pilferage, scrap and obsolescence
c. material handling costs
d. investment costs
e. all of the above are elements of inventory holding cost
all of the above are elements of inventory holding cost
Among the advantages of cycle counting is that it
a. makes the annual physical inventory more acceptable to management
b. does not require highly trained people
c. does not require the detailed records necessary when annual physical inventory is used
d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory
e. does not need to be performed for less expensive items
allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory
Work in process inventory is devoted to maintenance, repair and operations
False
When quantity discounts are allowed, the cost-minimizing order quantity
a. may be quantity below that at which one qualifies for that price
b. minimizes the sum of holding, ordering and product costs
c. minimizes the unit purchase price
d. is always an EOQ quantity
e. minimizes the sum of holding and ordering costs
minimizes the sum of holding, ordering and product costs
The two most basic inventory questions answered by the typical inventory model are
a. timing and cost of orders
b. quantity and cost of orders
c. ordering cost and carrying cost
d. timing and quantity of orders
e. order quantity and service level
timing and quantity of orders
The demand for automobiles would be considered an independent demand
True
ABC analysis divides on-hand inventory into three classes, generally based upon
a. unit price
b. item qualtiy
c. the number of units on hand
d. annual demand
e. annual dollar volume
annual dollar volume
Which of the following statements regarding the production order quantity model is true?
a. it applies only to items produced in the firm’s own production departments
b. it relaxes the assumption that all the order quantity is received at one time
c. it relaxes the assumption that the demand rate is constant
d. it minimizes inventory
e. it minimizes the total production costs
it relaxes the assumption that all the order quantity is received at one time
Which of the following statements regarding the reorder point is true?
a. the reorder point is that quantity that triggers an action to restock an item
b. the reorder point is larger than d x L if safety stock is present
c. the fixed-period model has no reorder point
d. there is a reorder point even if the lead time and demand during lead time are constant
e. all of the above are true
all of the above are true
Most inventory models attempt to minimize
a. total inventory based costs
b. the safety stock
c. the number of orders placed
d. the number of items ordered
e. the likelihood of a stockout
total inventory based costs
ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings
False
A major challenge in inventory management is to maintain a balance between inventory investment and customer service
True
Which of the following statements about the basic EOQ model is true?
a. if the carrying cost were to increase, the EOQ would fall
b. if the ordering cost were to double, the EOQ would rise
c. if annual demand were to double, the EOQ would increase
d. if annual demand were to double, the number of orders per year would increase
e. all of the above statements are true
all of the above statements are true
If demand is not uniform and constant, then stockout risks can be controlled by
a. increasing the EOQ
b. reducing the reorder point
c. placing an extra order
d. raising the selling price to reduce demand
e. adding safety stock
adding safety stock
In ABC analysis “A” items are the most tightly controlled
True
In level scheduling, what is kept uniform from month to month?
a. product mix
b. inventory levels
c. production/workforce levels
d. subcontracting levels
e. demand levels
production/workforce levels
Because service firms do not inventory their output pure chase strategy is not appropriate
False
Which of the following aggregate planning strategies might direct your client to a competitor?
a. Subcontracting
b. varying work force size by hireing or layoffs
c. changing inventory level
d.varying production rates through overtime or idle time
e. Using part-time workers
a. Subcontracting
Industries in which quadrant of the Yield Management Matrix are traditionally associated with revenue management?
a. use tends to be uncertain and price tends to be fixed
b. use tends to be predictable and price tends to be fixed
c. use tends to be uncertain and price tends to be variable
d. use tends to be predictable and price tends to be variable
e. All of the above; there is no difference
d. use tends to be predictable and price tends to be variable
Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.
True or False
True.
“An otimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods” best describes…
a. the management coefficients model
b. the transportation method
c. graphical methods
d.simulation
e. the linear decision rule
b. the transportation method
Aggregate planning in manufacturing ties organizational strategic goals to a production plan
True or False?
True motha lecka!
The typical time horizon for aggregate planning is…
a. up to 3 months
b 3 to 18 months
c.over one year
d. less than a month
e. over 5 years
b. 3 to 18 months
Planning tasks associated with loading, sequencing, expending, and dispatching typically fall under

a. intermediate range plans
b. mission related planning
c. long range plans
d. strategic planning
e. short range plans

e. short range plans
The strategies of aggregate planning are broadly divided into demand options and capacity options
True or False?
True.
Aggregate planning occurs over the medium or intermediate future of 3 to 18 months
True or False?
True.
Which choice below best describes the counterseasonal demand option?

a. the breaking of the aggregate plan into finer levels of detail
b. using subcontractors only when demand is excessive
c. producing such products as lawnmowers and sunglasses during the winter
d. lowering prices when demand is slack
e. developing a mix of products that smoothes out their demands

e. developing a mix of products that smoothes out their demands
Which of the following statements about aggregate planning is true?

a. disaggresgation turns the master production schedule into an intermediate term master plan
b. The development of mathematical models has allowed aggregate planners to discontinue use of trial and error methods
c. in aggregate planning back orders are means of manipulating supply while part time workers are a way of manipulating product or service demand
d. a pure chase strategy allows lower inventories when compared to pure level scheduling
e. all of the above are true.

d. a pure chase strategy allows lower inventories when compared to pure level scheduling.
Finding an ideal mixed strategy is complicated by the huge number of possible strategies.
True or False?
True.
Which of the following aggregate planning strategies is known to lower employee morale?

a. yield management
b. counterseasonal product and service mixing
c. back ordering during high demand periods
d. changing inventory levels
e. varying work force size by hiring or layoffs.

e. Varying work force size by hiring layoffs
The only objective of aggregate planning is to minimize the cost of matching capacity to demand over the planning period.
True or False
False.
Which of the following is NOT consistent with a pure level strategy?

a. using built-up inventory to meet demand requirements
b. finding alternative work for employees during low demand periods
c. varying production levels and or work force to meet demand requirements
d. varying the use of subcontracting
e. all of the above are inconsistent with the pure level strategy

c. varying production levels and or work force to meet demand requirements.
Which of these aggregate planning strategies adjusts capacity to match demand?

a. back ordering
b. using par-time workers
c. changing price
d. counterseasonal product mixing
e. none of the above is capacity option

b. using part-time workers.
Which of the following attempts to manipulate product or service demand?

a. part-time workers
b. inventories
c. subcontracting
d. price cuts
e. overtime/idle time

d. price cuts
Which of the following is consistent with a pure chase strategy?

a. vary work force to meet demand requirements
b. little or no use of inventory to meet demand requirements
c. vary production levels to meet demand requirements
d. vary production levels and work force to meet demand requirements
e. all of the above are consistent with a pure chase strategy

e. all of the above are consistent with a pure chase strategy

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