60. Which of the following is not one of the assumptions of the basic EOQ model?

A. Annual demand requirements are known and constant.

B. Lead time does not vary.

C. Each order is received in a single delivery.

D. Quantity discounts are available.

E. All of the above are necessary assumptions.

61. Which of the following interactions with vendors would potentially lead to inventory reductions?

A. reduce lead times

B. increase safety stock

C. less frequent purchases

D. larger batch quantities

E. longer order intervals

62. A non-linear cost related to order size is the cost of:

A. interest

B. insurance

C. taxes

D. receivingE. space

63. In a two-bin inventory system, the amount contained in the second bin is equal to the:

A. ROP

B. EOQ

C. amount in the ?rst bin

D. optimum stocking level

E. safety stock

64. When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves:

A. Line up

B. Equal zero

C. Do not line up

D. Cannot be calculated

E. Depend on the percentage assigned

65. Dairy items, fresh fruit and newspapers are items that:

A. do not require safety stocks

B. cannot be ordered in large quantities

C. are subject to deterioration and spoilage

D. require that prices be lowered every two days

E. have minimal holding costs

66. Which of the following is least likely to be included in order costs?

A. processing vendor invoices for payment

B. moving delivered goods to temporary storage

C. inspecting incoming goods for quantity

D. taking an inventory to determine how much is needed

E. temporary storage of delivered goods

67. In an A-B-C system, the typical percentage of the number of items in inventory for A items is about:

A. 10

B. 30

C. 50

D. 70

E. 90

68. In the A-B-C classi?cation system, items which account for ?fteen percent of the total dollar-volume for a

majority of the inventory items would be classi?ed as:

A. A items

B. B items

C. C items

D. A items plus B items

E. B items plus C items

69. In the A-B-C classi?cation system, items which account for sixty percent of the total dollar-volume for few

inventory items would be classi?ed as:

A. A items

B. B items

C. C items

D. A items plus B items

E. B items plus C items

70. The purpose of “cycle counting” is to:

A. count all the items in inventory

B. count bicycles and motorcycles in inventory

C. reduce discrepancies between inventory records and actual

D. reduce theft

E. count 10% of the items each month

71. The EOQ model is most relevant for which one of the following?

A. ordering items with dependent demand

B. determination of safety stock

C. ordering perishable items

D. determining ?xed interval order quantities

E. determining ?xed order quantities

72. Which is not a true assumption in the EOQ model?

A. Production rate is constant

B. Lead time doesn’t vary

C. No more than 3 items are involved

D. Usage rate is constant

E. No quantity discounts

73. In a supermarket, a vendor’s restocking the shelves every Monday morning is an example of:

A. safety stock replenishment

B. economic order quantities

C. reorder points

D. ?xed order interval

E. blanket ordering

74. A cycle count program will usually require that ‘A’ items be counted:

A. daily.

B. once a week.

C. monthly.

D. quarterly.

E. more frequently than annually.

75. A risk avoider would want ______ safety stock.

A. Less

B. More

C. The same

D. Zero

E. 50%

76. In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:

A. It doubles.

B. It is four times its previous amount.

C. It is half its previous amount.

D. It is about 70 percent of its previous amount.

E. It increases by about 40 percent.

77. In the basic EOQ model, if lead time increases from ?ve to 10 days, the EOQ will:

A. double

B. increase, but not double

C. decrease by a factor of two

D. remain the same

E. none of the above

78. In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per

unit per year will result in an EOQ of:

A. 20

B. square root of 200

C. 200

D. 400

E. none of these

79. In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:

A. 10

B. 12

C. 24

D. 72

E. 144

80. In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is

approximately:

A. 11

B. 20

C. 24

D. 28

E. 375

81. Which of the following is not true for Economic Production Quantity model?

A. Usage rate is constant.

B. Production rate exceeds usage rate.

C. Run size exceeds maximum inventory.

D. There are no ordering or setup costs.

E. Average inventory is one-half maximum inventory.

82. Given the same demand, setup/ordering costs, and carrying costs, the EOQ calculated using incremental

replenishment will be ____________ if instantaneous replenishment was assumed:

A. greater than the EOQ

B. equal to the EOQ

C. smaller than the EOQ

D. greater than or equal to the EOQ

E. smaller than or equal to the EOQ

83. The introduction of quantity discounts will cause the optimum order quantity to be:

A. smaller

B. unchanged

C. greater

D. smaller or unchanged

E. unchanged or greater

84. A ?ll rate is the percentage of _____ ?lled by stock on hand.

A. Shipments

B. Demand

C. Inventory

D. Safety stock

E. Lead time

85. In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the

EOQ of the lowest curve to be optimum, it must:

A. have the lowest total cost

B. be in a feasible range

C. be to the left of the price break quantity for that price

D. have the largest quantity compared to other EOQ’s

E. none of the above

86. Which one of the following is not generally a determinant of the reorder point?

A. rate of demand

B. length of lead time

C. lead time variability

D. stockout risk

E. purchase cost

87. If no variations in demand or lead time exist, the ROP will equal:

A. the EOQ

B. expected usage during lead time

C. safety stock

D. the service level

E. the EOQ plus safety stock

88. If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100

units, the reorder point is:

A. 100 units

B. 200 units

C. 300 units

D. 600 units

E. 700 units

89. Which one of the following is implied by a “lead time” service level of 95 percent?

A. Approximately 95 percent of demand during lead time will be satis?ed.

B. Approximately 95 percent of inventory will be used during lead time.

C. The probability is 95 percent that demand during lead time will exactly equal the amount on hand at the

beginning of lead time.

D. The probability is 95 percent that demand during lead time will not exceed the amount on hand at the beginning

of lead time.

E. none of the above

90. Which one of the following is implied by an “annual” service level of 95 percent?

A. Approximately 95 percent of demand during lead time will be satis?ed.

B. The probability is 95 percent that demand will exceed supply during lead time.

C. The probability is 95 percent that demand will equal supply during lead time.

D. The probability is 95 percent that demand will not exceed supply during lead time.

E. None of the above.