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Management
Q:
A decrease in an item's lead-time will increase the amount of safety stock required to maintain a constant service level.
Q:
Assuming that we are currently placing orders in EOQ amounts, an increase in the order quantity would increase annual ordering costs.
Q:
At the Economic Order Quantity:
A. The annual ordering cost for an item is greater than the annual holding cost
Q:
The EOQ formula could be modified to express demand and the carrying rate on a monthly basis.
Q:
Which of the following is correct?
Q:
In an ABC Classification, it is logical to employ a periodic review system to monitor A items.
Q:
Safety stock inventory is:
A. Equivalent to the Economic Order Quantity
Q:
In general, it is extremely difficult to estimate stockout costs and hence we use the desired service levels while computing the reorder points.
Q:
The average inventory level is defined as the difference between the cycle stock and the safety stock.
Q:
If the Economic Order Quantity for an item is 140, what is the average number of cycle inventory units?
Q:
Dependent demand items are subject to market forces and often have predictable demand patterns.
Q:
The choice between P and Q systems should be based on:
A. Timing of replenishment
Q:
Transit inventories are also referred to as pipeline inventories because they consist of materials that are on their way from one point to another point in the supply chain.
Q:
In the basic EOQ model, if the lead time doubles, the EOQ will:
A. Decrease by half
B. Double
C. Remain the same
D. Increase, but not double
Q:
Demand for an item is 20 units per week and delivery lead time is 2 weeks. The safety stock is known to be 14 units. Using a P system, and assuming a P value of 3 weeks, what is the target inventory level (T)?
Q:
ABC analysis requires that inventory be classified according to:
A. Alphabetical order by item name
B. Annual dollar usage
C. Activity-based costs
D. Due date
Q:
Demand for an item is 10 units per week and delivery lead time is 3 weeks. The safety stock is known to be 11 units. Using a Q system, what is the reorder point (R)?
Q:
A paint supplier that places orders for different colors of paint for delivery at the same time should use a:
A. P system
B. Q system
C. Dependent demand inventory model
D. Quantity discount model
Q:
Service levels is:
A. The percentage of time the system has an item on hand
Q:
Which of the following statements is true about a Q system?
A. It does not have a reorder point but rather a target inventory.
B. The system is completely determined by the two parameters, Q and R.
C. It does not have an EOQ because the quantity varies according to demand.
D. The order interval is fixednot the order quantity.
Q:
In the basic EOQ model, if annual demand and carrying costs double, the EOQ:
A. Doubles
Q:
If the actual order quantity Q is much larger than the Economic Order Quantity:
A. The firm is paying high annual holding costs
Q:
Which of the following is NOT an assumption of the basic EOQ model?
A. Annual demand is constant and known.
B. Lead-time is constant and known.
C. No stockouts are allowed.
D. Quantity discounts are available.
Q:
Capacity, as opposed to inventory:
A. Is the rate at which a stock can be depleted
B. Covers anticipated changes in demand or supply
C. Is resources that provide the potential to produce items
D. Is a stock of raw materials, work in process, or finished goods used to facilitate production or satisfy customer demands
Q:
Independent demand inventory consists of:
A. Inventory whose demand comes from independent suppliers
B. Inventory that is independent of any known rules of demand and supply
C. Demand that is related to the demand for another item
D. Inventory whose demand is determined by market conditions outside the firm
Q:
In a Q system, average inventory:
A. Is depleted at a constant rate
B. Is set to cover average demand over the lead time plus the review interval
C. Is relatively flat in the neighborhood of the minimum
D. Tends to be less than under a system of periodic review (P system)
Q:
Transportation cost is an example of:
A. Item cost
B. Ordering cost
C. Carrying cost
D. Storage cost
Q:
Unlike a requirements philosophy of inventory management, a replenishment philosophy:
A. Calls for orders based on higher-level items
B. Applies to raw materials inventories
C. Is appropriate given independent demand
D. Causes demand to be dependent
Q:
A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week. What kind of system is this?
A. A periodic review system
B. A continuous review system
C. A service level system
D. An ABC inventory system
Q:
Which of the following is NOT a purpose of inventory?
A. To protect against uncertainties
B. To allow economic production of batches
C. To provide for transit
D. To decrease obsolescence
Q:
The carrying cost for inventory consists of which cost components?
A. Capital cost, obsolescence cost, and ordering cost
B. Obsolescence cost, capital cost, and stockout cost
C. Obsolescence cost, storage cost, and capital cost
D. Storage cost, handling cost, and obsolescence cost
Q:
A particular brand of soap has a lead time of three weeks to reorder, a weekly standard deviation of ten units and a weekly average usage of 30 units. The reorder point for this soap, assuming a 95% service level (z = 1.645), is:
A. 16.45 units
B. 28.50 units
C. 106.45 units
D. 118.49 units
Q:
Of the cost elements making up total inventory cost, which is the most difficult to estimate?
A. Stockout costs
B. Holding costs
C. Carrying costs
D. Item cost
Q:
A work-breakdown structure is used in the scheduling activity of project management.
Q:
The total cost per year for question 9, assuming no stockouts, is approximately equal to:
A. The total cost cannot be determined from the given information.
B. $273.86
C. $547.72
D. $2,738.60
E. $5,477.20
Q:
PERT assumes that the statistical variation in total project completion times can be computed by adding the standard deviations along the critical path.
Q:
Given that unit cost = $25, annual carrying charge = 10%, annual demand = 4000 units and ordering cost = $15 per order, the EOQ is:
A. 22 units
B. 155 units
C. 219 units
D. 300 units
Q:
The early start and late start times are equal for an activity on the critical path of a network.
Q:
Which of the following statements is NOT true about managing inventory in supply chains?
A. In a supply chain, a single firm typically controls all of the inventories that are required while manufacturing a product.
B. Coordination among supply chain partners is essential while managing inventory across the supply chain.
C. The total cost minimization approach can be applied while managing inventory across the supply chain.
D. Vendor managed inventory is an initiative shifting responsibility for managing inventory to suppliers.
Q:
Critical path method (CPM) network scheduling assumes a second order (non-linear) time-cost tradeoff exists.
Q:
Which cost defines the cost of capital?
A. Item cost
B. Storage cost
C. Deterioration cost
D. Opportunity cost of investment in inventory
Q:
A forward pass is required while computing the early start and early finish times of activities.
Q:
Which cost is NOT part of inventory ordering costs?
A. Transportation costs
B. Obsolescence costs
C. Setup costs
D. Receiving costs
Q:
*The following question requires a Standard Normal Probability Distribution (Appendix A in the textbook). Which of the following statements about critical path method (CPM) is true?
A. It is an example of a variable time project scheduling method.
B. It is well suited when activity times are expected to vary.
C. It is well suited when activity times are fairly constant and can be reduced by spending more money.
D. It is well suited for R&D projects and for scheduling computer systems.
Q:
Which of the following statements is true about a critical path?
A. It consists of activities for which early start time equals late start time.
B. The total time of activities on the path take the longest time.
C. There is no slack in the activities along the critical path.
D. All of the above
Q:
Controlling a project does NOT include:
A. Monitoring costs, time, and performance
B. Adhering to the budget
C. Correcting the plan as necessary
D. None of the above
Q:
Gantt charts are effective for project scheduling if:
A. Activities are highly interconnected
B. Activity times are random
C. The project contains simple activity sequences
D. All of the above
Q:
The information calculated from the forward and backward pass can be used for:A. Identifying the critical pathB. Calculating slackC. Determining the final completion date of the projectD. All of the above
Q:
Project management requires:
A. Scheduling, planning, and controlling
B. Quantitative skills
C. Behavioral skills
D. All of the above
Q:
The advantage(s) that the Gantt chart has over the network method is (are):A. A Gantt chart is easy to use and quite widely understood.B. Gantt charts show precedence relationships more explicitly than network scheduling.C. Gantt charts require specialized training.D. All of the above
Q:
Multiple critical paths can exist under the critical path method (CPM) because:
A. There is more than one way to complete the project
B. Different network paths can have the same total time
C. Great flexibility of activity sequences is available
D. None of the above
Q:
An assumption of the PERT method is:
A. Activity times are not constant.
B. There is uncertainty in individual activity time estimates.
C. Distribution of project completion times and the probability that each activity is on the critical path can be computed.
D. All of the above
Q:
Project managers work includes:A. Planning, Scheduling, Control, and ClosingB. Planning, Scheduling, Starting, and EndingC. Scheduling, Control, Starting, and EndingD. None of the above
Q:
The purpose of performing a forward pass is to:
A. Identify the critical path
B. Determine the early start and the early finish times
C. Determine the late start and the late finish times
D. Determine the slack available in the process
Q:
Project managers objectives include:A. CostB. QualityC. FlexibilityD. All of the above
Q:
The job of the project manager is to:A. Control all costsB. Control costs, schedule, and performance of the projectC. Keep within the budget, no matter whatD. All of the above
Q:
What are the steps that could be taken at a bottleneck resource to increase its capacity?
Q:
Optimal sequencing rules have found widespread use in practice.
Q:
Given the following information: Job
Workcenter/ Machine Hours 1
A/3, B/3, C/4 2
B/3, A/1, C/2 3
C/2, B/3, A/3 Lead time for completion of a job is a function of:
A. Capacity and demand
B. Capacity and priority decisions
C. Capacity and supply decisions
D. None of the above
Q:
First come, first served is widely used in both service and manufacturing firms.
Q:
For services, the most common priority dispatch rule is:A. Critical ratioB. Preemptive ruleC. First come, first servedD. Shortest processing time
Q:
The Shortest process time (SPT) rule is better at meeting due dates when compared to the Critical Ratio rule.
Q:
Throughput is defined as the difference between the sales and the operating expenses of a plant.
Q:
Finite Capacity Scheduling can be used to identify the bottleneck in a given process.
Q:
Shortest processing time (SPT) rule means:A. The job with the least processing time is worked on nextB. The job needed at the bottleneck is worked on nextC. The same as Critical ratioD. None of the above
Q:
A bottleneck is:A. A resource that has the maximum capacity in the facilityB. A resource whose capacity is less than the capacity of all other resources and whose capacity is less than the demand placed on itC. A resource that blocks labor productivityD. A resource that has the fastest processing time
Q:
One way of leveling a seasonal demand pattern is by developing complementary products or services.
Q:
Facilities Planning, Aggregate Planning, and Scheduling form a hierarchy of decisions extending from long-range to medium-range to short-range, respectively, concerning the capacity of operations.
Q:
The ABC Cement Corporation produces a high quality cement that is supplied to construction companies. The potential demand and the probability of each potential demand quantity are given for the upcoming year.Demand in tonsProbability500,0000.3250,0000.4300,0000.3Assuming manufacturing capacity of 700,000 tons, the estimated capacity cushion is:A. 340,000 tonsB. 360,000 tonsC. >1,000,000 tonsD. It cannot be computed from this information
Q:
The overriding problem in batch scheduling is:
A. Regulating input
B. Controlling output
C. Managing queues
D. Assigning labor
Q:
Scheduling deals with which three conflicting objectives?
A. High efficiency, high profits, and short lead-time
B. High profits, low inventories, and good customer service
C. Low inventories, high efficiency, and good customer service
D. Low inventories, good customer service, and short lead-time
Q:
A firm produces 12 different services and has capacity to service 360,000 customers per year. A total of 24 service workers are employed. If 270,000 customers receive service during a particular year, what is the capacity cushion during that year?A. 25%B. 50%C. 75%D. There is not enough information to determine the answer
Q:
Aggregate planning and scheduling differ in that:
A. The former ensures capacity is efficiently used whereas the latter is the acquisition of resources.
B. The former is short term in nature while the latter is medium term.
C. The former is last in the hierarchy of capacity planning decisions and the latter is first.
D. The former deals with acquiring resources and the latter deals with allocating resources.
Q:
A small capacity cushion:A. Maximized utilizationB. Is used when capacity is inexpensiveC. Means that the cushion is 0%D. Is a competitive disadvantage
Q:
Describe the most important questions to be answered concerning decisions. Apply the questions to a fast food restaurant chain with expanding demand.
Q:
A large capacity cushion is appropriate when:A. A make-to-stock process is usedB. A firm is attempting to capture market share in a growing industryC. The market for its products or services is shrinkingD. A firm wants its capacity to match average demand
Q:
Describe the types of short-range, the medium-range, and the long-range capacity decisions.
Short-range: Decisions are constrained by aggregate planning and facility decisions. Allocate the available capacity by assigning it to specific activities.
Q:
Which of the following accurately describes a chase strategy?
A. The firm produces the same amount each day over the planning period and deals with the variations in demand with inventory or overtime.
B. The firm produces at the same level for half of the year, and then adjusts production to another level and produces at that level for the remainder of the year.
C. The firm produces exactly what is needed each month.
D. None of the above.
Q:
A wait-and-see facility approach uses a positive capacity cushion.
Q:
Aggregate planning costs do NOT include:
A. Hiring and layoff costs
B. Part-time labor costs
C. Subcontracting costs
D. Inventory ordering costs