1. The introduction of quantity discounts will cause the optimal order quantity to be: A) smaller B) unchanged C) greater D) smaller or unchanged E) unchanged or greater
2. Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time? A) 40 B) 200 C) 2 times the square root of 20 D) 2 times the square root of 10 E) none of the above
3. Which inventory model is most appropriate if unused or unsold items cannot be carried over to subsequent periods? A) economic order quantity B) economic production quantity C) single period D) quantity discount E) reorder point
4. If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be: A) 20 B) 50 C) 70 D) 80 E) 130
5. With an A-B-C system, an item that had a high demand but a low annual dollar volume would probably be classified as: A) A B) B C) C D) none of these
The materials manager for a billiard ball maker must periodically place orders for resin, one of the materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four (4) days.
6. At what point should resin be reordered? A) 0 kilograms remaining B) 50 kilograms remaining C) 200 kilograms remaining D) 400 kilograms remaining B) 500 kilograms remaining
7. If order size were 1,000 kilograms of resin, what would be the length of an order cycle? A) 0.05 days B) 4 days C) 16 days D) 20 days E) 50 days
8. If the order size were 1,000 kilograms of resin, what would be the average inventory level? A) 50 kilograms B) 200 kilograms C) 500 kilograms D) 800 kilograms E) 1,000 kilograms
9. If the order size were 1,000 kilograms of resin, what would be the daily total inventory costs, EXCLUDING the cost of resin? A) $5 B) $10 C) $20 D) $25 E) $40
10. What is the economic order quantity for resin? A) 50 kilograms B) 100 kilograms C) 250 kilograms D) 500 kilograms E) 1,000 kilograms
11. The injection molding department of a company uses 40 pounds of a powder a day. Inventory is reordered when the amount on hand is 240 pounds. Lead time averages five days. It is normally distributed and has a standard deviation of two days. What is the probability of a stockout during leadtime?
A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate.
12. Compared to the EOQ, the economic run size would be: A) the same B) approximately 20 percent larger C) approximately 40 percent larger D) 20 percent smaller E) approximately 40 percent smaller
13. Compared to the EOQ, the maximum inventory would be: A) approximately 70 percent higher B) approximately 30 percent higher C) the same D) approximately 30 percent lower E) approximately 70 percent lower
A company can produce a part it uses in an assembly operation at the rate of 50 an hour. The company operates 8 hours a day, 300 days a year. Daily usage of the part is 300 parts. The company uses the part every day. The run size is 6,000 parts. The annual holding cost is $2 per unit, and setup cost is $100.
14. How many runs per year will there be?
15. While production is occurring, how many parts per day are being added to inventory?
16. Assuming that production begins when there are no parts on hand. What is the maximum number of parts in inventory?
17. The machine produces only this product. Every so often, preventive maintenance which requires six working days, must be performed on it. Does this interrupt production cycles, or is there enough time between cycles to perform the maintenance? Explain.