Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Inventory models in which the rate of demand is constant are called
a. | fixed models. | b. | deterministic models. | c. | JIT
models. | d. | requirements models. |
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2.
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The EOQ model
a. | determines only how frequently to order. | b. | considers total
cost. | c. | minimizes both ordering and holding costs. | d. | All of the
alternatives are correct. |
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3.
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Which cost would not be considered part of a holding cost?
a. | cost of capital | b. | shipping cost | c. | insurance
cost | d. | warehouse overhead |
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4.
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The economic production lot size model is appropriate when
a. | demand exceeds the production rate. | b. | there is a constant supply rate for every
period, without pause. | c. | ordering cost is equivalent to the production
setup cost. | d. | All of the alternatives are correct. |
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5.
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Annual purchase cost is included in the total cost in
a. | the EOQ model. | b. | the economic production lot size
model. | c. | the quantity discount model. | d. | all inventory
models. |
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6.
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In the single-period inventory model with probabilistic demand,
a. | surplus items are not allowed to be carried in future inventory. | b. | co =
cu. | c. | probabilities are used to calculate expected losses. | d. | All of the
alternatives are correct. |
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7.
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For the inventory model with planned shortages, the optimal order quantity
results in
a. | annual holding cost = annual ordering cost. | b. | annual holding cost
= annual backordering cost. | c. | annual ordering cost = annual holding cost +
annual backordering cost. | d. | annual ordering cost = annual holding cost
- annual backordering cost. |
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8.
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The definition of service level used in this chapter is
a. | the percentage of all demand that can be satisfied from
inventory. | b. | the percentage of all order cycles that do not experience a
stockout. | c. | the percentage of demand during the lead-time period that can be satisfied from
inventory. | d. | None of the alternatives is correct. |
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9.
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Periodic review inventory systems
a. | are less subject to stockouts than corresponding continuous review
systems. | b. | require larger safety stock levels than corresponding continuous review
systems. | c. | have constant order quantities. | d. | make the coordination of orders for multiple
products more difficult. |
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10.
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The objective of the EOQ with quantity discounts model is to
a. | determine the minimum order quantity required for the maximum
discount. | b. | balance annual ordering and holding costs. | c. | minimize annual
purchase cost. | d. | minimize the sum of annual carrying, holding, and purchase
costs. |
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