StudyQuestions_CH20_002

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Western Governors University *

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202

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Apr 3, 2024

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Your Answer Setup costs are also known as production change costs. Field 1 Correct Answer Field 1: change (© Need help? Review these concept resources. Read About the Concept
Your Answer The managerial and clerical costs to prepare purchase or production orders are called: ) shortage costs Reason: This is the cost of being out of an item. logistics costs Reason: This is not an inventory cost. holding costs Reason: This is the cost of financing the inventory. ordering costs 7 Correct Answer ordering costs (© Need help? Review these concept resources. Read About the Concept
Your Answer As it relates to inventory, a buyer's time expended to prepare the purchase order for more material is considered a(n) cost. ) execution Reason: This is not an inventory holding cost. buffer Reason: This is not an inventory holding cost. holding Reason: Purchasing inventory is not a cost associated with holding inventory. ordering 7 Correct Answer ordering (© Need help? Review these concept resources. Read About the Concept
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Which of the following is a policy and control of an inventory system? ) The payment terms associated with buying the stock from vendors Reason: This is something that procurement/purchasing would negotiate with the vendors. When stock should be replenished How one will finance the stock Reason: This is an issue for top management. ' Who should order the stock Reason: Who should place the order is important but it is not part of the inventory system. Correct Answer When stock should be replenished (© Need help? Review these concept resources. Read About the Concept
Your Answer If there were no costs or loss of time in changing from one product to another, what would the impact be? Check all that apply. Reduced inventory levels ‘ Costs would be lower T Many small lots would be produced .| Costs would be higher Reason: With low setup times, the firm would want to hold less inventory. That leads to lower costs. | Increased inventory levels Reason: Production would be in smaller batches, reducing the need to hold inventory. Correct Answer Reduced inventory levels Costs would be lower Many small lots would be produced
Your Answer According to the inventory control system matrix, independent demand with high transaction costs, it is likely to deploy what type inventory control process? Rate-based synchronous planning Reason: This is for dependent demand with low transaction costs. Material requirements planning Reason: This is for moderately dependent demand and moderate transaction costs. Manual two-bin 7 Reorder point/equal order period Reason: This is for moderately dependent demand and moderate transaction costs. Correct Answer Manual two-bin (© Need help? Review these concept resources.
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Your Answer True or false: One purpose of holding inventory is to meet variation of product demand. True False Reason: Inventory provides a buffer against the uncertainty associated with customer demand patterns Correct Answer True (© Need help? Review these concept resources. Read About the Concept
Your Answer Manual systems such as simple two - bin logic depend on human posting of the transactions to replenish Field 1 Field 2 inventory. Correct Answer Field 1: two or 2 Field 2: bin (© Need help? Review these concept resources. Read About the Concept
Your Answer Which of the following are inventory ordering costs? Check all that apply. Calculating order quantities Counting items | Deciding which vendor to use Reason: This is the job of procurement/purchasing and is not included in ordering costs. Costs associated with maintaining the tracking system T Correct Answer Calculating order quantities Counting items Costs associated with maintaining the tracking system
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Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as demand. marketing Reason: Marketing is not a type of demand. ) forecasted Reason: Forecasted is not a type of demand. ) dependent Reason: The demand for soup does not depend on demand for other products that Campbell's Soup makes. independent 7 Correct Answer independent (© Need help? Review these concept resources.
Your Answer The set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be is called a(n) inventory system. Field 1 Correct Answer Field 1: inventory (© Need help? Review these concept resources. Read About the Concept
An inventory control system is responsible for which of the following? Ordering goods T .| Selecting new vendors Reason: While selecting new vendors is important, it is not performed by an inventory control system. Timing the order placement T | Finding the best price for goods Reason: This would be done by purchasing. Receiving goods Keeping track of what has been ordered Correct Answer Ordering goods Timing the order placement Receiving goods Keeping track of what has been ordered
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Your Answer High holding costs tend to favor low inventory levels and frequent replenishment. Field 1 Field 2 Correct Answer Field 1: low or lower Field 2: frequent (© Need help? Review these concept resources. Read About the Concept
Your Answer How many axes are used for the inventory-control-system design matrix framework? Reason: It has more than one axis. )2 Reason: While it only has one y-axis, there are two x-axes. ; I 4 Reason: This is too high. Correct Answer (© Need help? Review these concept resources. Read About the Concept
Which of the following is also called a periodic review system or fixed-order interval system or P-model? Fixed-time period Perpetual Reason: A perpetual inventory system is where inventory is tracked by computer. ) Single-period Reason: This is a model to use when an item has a limited life and cannot be reordered. Fixed-order quantity Reason: This is where the same quantity is ordered each time. Correct Answer Fixed-time period (© Need help? Review these concept resources. Read About the Concept
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Your Answer Transaction cost is dependent on the level of integration and automation incorporated in the system. Field 1 Correct Answer Field 1: Transaction (© Need help? Review these concept resources. Read About the Concept
Which of the following highlights a dependent demand scenario? ) Smart phones purchased at retailer Reason: This would be independent demand for the retailer since the demand does not depend on anything else they sell. Flowers purchased at a garden center Reason: This would be independent demand for the garden center since the demand does not depend on anything else they sell. ) Gallons of milk purchased at a grocery store Reason: This would be independent demand for the grocery store since the demand does not depend on anything else they sell. The four tires needed to complete a car 7 Correct Answer The four tires needed to complete a car (© Need help? Review these concept resources. Read About the Concept
Your Answer An inventory control Field 1 Field 2 controlling goods to be stocked. Correct Answer Field 1: inventory Field 2: control (© Need help? Review these concept resources. Read About the Concept system provides the organizational structure and the operating policies for maintaining and
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Your Answer Inventory position is defined as the on-hand plus on-order minus backordered quantities. Field 1 Field 2 Correct Answer Field 1: Inventory Field 2: Position (© Need help? Review these concept resources. Read About the Concept
If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model? Fixed-order quantity Reason: With this type of model, a fixed amount Q is ordered each time more is needed. Periodic Reason: With this type of model, orders are placed at regular intervals. LIFO Reason: Last in, first out is a way of managing how items are withdrawn from inventory. © Single-period 7 Correct Answer Single-period (© Need help? Review these concept resources. Read About the Concept
Match the characteristics of the Q- and P-models based on time to maintain. ‘ Q-model ‘ —_— Higher ‘ P-model ‘ —_— Lower Correct Answer Q-model —_— Higher P-model —_— Lower (© Need help? Review these concept resources. Read About the Concept
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Your Answer A fixed-order quantitiy model uses a reorder point, R, to trigger an order of an optimum amount of product, labeled Q. Field 1 Correct Answer Field 1: quantity or amount (© Need help? Review these concept resources. Read About the Concept
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Total annual cost is made of of three components. Match the components with their formulas. DC —_— D D —_— QS Q SH —_— Correct Answer Annual purchase price S — Annual ordering cost %H —_— Annual holding cost (© Need help? Review these concept resources. Read About the Concept - Annual purchase price - Annual ordering cost - Annual holding cost
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Your Answer A single period inventory model helps in situations where a company is trying to produce the optimal quantity of inventory for a single Field 1 event minimizing overproduction costs and potential lost revenues. Correct Answer Field 1: inventory (© Need help? Review these concept resources. Read About the Concept
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Your Answer Match the terms in the EOQ equation with their meanings. TC Correct Answer - Total annual cost - Annual demand - Cost per unit - Amount to be ordered - Cost of placing an order or setup cost - Reorder point - Lead time - Annual holding and storage cost per unit of average inventory
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Your Answer In a fixed-time period inventory model, the interval of time between orders is fixed and order quantity varies. Field 1 Correct Answer Field 1: period or periodic (© Need help? Review these concept resources. Read About the Concept
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Your Answer In companies using fixed-order quantity inventory systems, a consistent inventory level is used as a trigger to order more product. This inventory level is called: ) execution threshold Reason: This is not an inventory term. reorder point 7 point of entry Reason: This is not an inventory term. ) ordering guideline Reason: While it may be a guideline, this is not the correct answer. Correct Answer reorder point (© Need help? Review these concept resources. Read About the Concept
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Fixed—time-period models are = time triggered. Field 1 Correct Answer Field 1: time (© Need help? Review these concept resources. Read About the Concept
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Match the characteristics of the Q- and P-models based on when an order is placed. o When the inventory position drops to the Q-model —_— reorder level o ‘ P-model ‘ —_— When the review period arrives Correct Answer When the inventory position drops to the Q-model —_— reorder level P-model — When the review period arrives
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Your Answer The two critical components of ALL reorder point calculation scenarios are: ) annual demand and lead time in days. Reason: While demand is important, annual demand is not used. average daily demand and lead time in days. 7 ) average product costs and average daily lead time. Reason: Product cost is not a factor in reorder point calculations. ) order cycle time and transportation costs. Reason: Neither of these are a factor in reorder point calculations. Correct Answer average daily demand and lead time in days.
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Your Answer Which of the following is/are components of total costs in a fixed-quantity inventory system? Annual holding costs T | Annual marketing costs Reason: Marketing costs are not included in inventory calculations. Annual ordering costs Annual purchase costs | Annual production labor costs Reason: This would a component of annual purchase price. Correct Answer
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The reorder point is ) ZL Reason: This is not a term that is used. ) zop Reason: The amount of safety stock. SdL Reason: Average demand during lead time. Correct Answer
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What is the portion of the EOQ equation represents annual holding cost? H oo Reason: This is the annual ordering cost. Q 2H DC Reason: This is the annual purchase price. ) TC Reason: This is total annual cost. Correct Answer Q IH
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Your Answer The probability approach to determining safety stock considers only the probability of running out of stock, not how many units we Field 1 are short. Correct Answer Field 1: units (© Need help? Review these concept resources. Read About the Concept
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Your Answer Match the components of the reorder point equation with their meaning. @ R —_— Reorder point @ T —_— Average daily demand @ L —_— Lead time in days Correct Answer Reorder point d —_— Average daily demand L — Lead time in days
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Your Answer The danger of stockout in the fixed-order quantity model occurs only during the point R Field 1 Field 2 Correct Answer Field 1: lead Field 2: time (© Need help? Review these concept resources. Read About the Concept
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Reason: Average demand during lead time. z0L, R Reason: The reorder point. ) ZL Reason: This is not a term that is used. Correct Answer z0L, (© Need help? Review these concept resources. Read About the Concept
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Your Answer Fixed-time period models tend to have greater safety stock than fixed-order quantity models because the inventory is not tracked Field 1 as closely. Correct Answer Field 1: period (© Need help? Review these concept resources. Read About the Concept
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Your Answer Acme Company carries an additional level of inventory beyond the expected demand during reorder lead times. This additional inventory is called: raw material Reason: Raw materials are things purchased from other firms. ) just-in-case supplies Reason: While this might describe this inventory, this is not the correct term. safety stock 7 backorder stock Reason: Backorders are orders that cannot be filled from inventory. There is no such thing as backorder stock. Correct Answer safety stock (© Need help? Review these concept resources. Read About the Concept
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Your Answer In companies using fixed-order quantity inventory systems, a consistent inventory level is used as a trigger to order more product. This inventory level is called: reorder point 7 ) ordering guideline Reason: While it may be a guideline, this is not the correct answer. ) execution threshold Reason: This is not an inventory term. point of entry Reason: This is not an inventory term. Correct Answer reorder point (© Need help? Review these concept resources.
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Your Answer A key financial ratio directly tied to inventory is called? Inventory turns 7 ) Cost of goods sold Reason: Cost of goods sold is tied to inventory, in part, but is not a financial ratio. Debt ratio Reason: Debt ratio is not directly tied to inventory. Earnings per share Reason: Earnings per share is not directly tied to inventory. Correct Answer Inventory turns (© Need help? Review these concept resources. Read About the Concept
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Your Answer Carrying one standard deviation worth of safety stock gives us what probability of a stockout? .01 Reason: This is about three standard deviation units. .05 Reason: This is about two standard deviation units. 16 .84 Reason: This is the probability of not stocking out. .95 Reason: This is the probability of not stocking out with two standard deviations. .99 Reason: This is the probability of not stocking out with three standard deviations. Correct Answer 16
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