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Set 2
Set 2
3. Which of the following statements about the northwest corner rule is false?
a. One must exhaust the supply for each row before moving down to the next row.
b. One must exhaust the demand requirements of each column before moving to the next
column.
c. When moving to a new row or column, one must select the cell with the lowest cost.
d. One must check that all supply and demand constraints are met.
e. All of the above are false.
6. When the number of shipments in a feasible solution is less than the number of rows
plus the number of columns minus one
a. the solution is optimal
b. there is degeneracy, and an artificial allocation must be created
c. a dummy source must be created
d. a dummy destination must be created
e. the closed path has a triangular shape
12. Which of the following would not generally be a motive for a firm to hold
inventories?
a. to take advantage of quantity discounts
b. minimize holding costs
c. reduce stockout risks
d. decouple production from distribution
e. meet anticipated demand
13. Which of the following statements about ABC analysis is false?
a. ABC analysis is based on the presumption that controlling the few most important items
produces the vast majority of inventory savings.
b. In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive
regular review by major decision makers.
c. ABC analysis is based on the presumption that all items must be tightly controlled to
produce important cost savings.
d. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls
e. None of the above statements are true.
14. ABC analysis divides on-hand inventory into three classes, generally based upon
a. unit price
b. the number of units on hand
c. annual demand
d. annual dollar volume
e. item quality
16. 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. timing and quantity of orders
d. order quantity and service level
e. ordering cost and carrying cost
17. Which of the following statements about the basic EOQ model is true?
a. If the ordering cost were to double, the EOQ would rise.
b. If annual demand were to double, the EOQ would increase.
c. If the carrying cost were to increase, the EOQ would fall.
d. If annual demand were to double, the number of orders per year would decrease.
e. All of the above statements are true.
18. An inventory decision rule states that "when the inventory level goes down to 14
gearboxes, 100 gearboxes will be ordered." Which of the following statements is
true?
a. 100 is the reorder point, and 14 is the order quantity.
b. The number 100 is a function of demand during lead time.
c. 14 is the safety stock, and 100 is the reorder point.
d. 14 is the reorder point, and 100 is the order quantity.
e. None of the above.
20. 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 the demand rate is constant.
c. It minimizes the total production costs.
d. It relaxes the assumption that all the order quantity is received at one time.
e. It minimizes inventory.
21. Which of the following statements about quantity discounts is false?
a. The cost-minimizing solution may, or may not, be where annual holding costs equal annual
ordering costs.
b. In inventory management, item cost becomes relevant to inventory decisions only when a
quantity discount is available.
c. The larger annual demand, the less attractive a discount schedule will be.
d. The smaller the ordering cost, the less attractive a discount schedule will be.
e. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price
in the discount schedule.
22. The layout strategy that deals with low-volume, high-variety production is
a. fixed-position layout
b. retail/service layout
c. warehouse layout
d. all of the above
e. none of the above
24. For which of the following operations would a fixed-position layout be most
appropriate?
a. assembly of an automobile
b. production of cameras and TV sets
c. construction of a ship
d. refining of crude oil
e. grocery store
25. The type of layout which features departments or other functional groupings in
which similar activities are performed is
a. process
b. product
c. fixed-position
d. mass
e. unit