Production and Operations Management

171. Cycle counting

  1. Provides a measure of inventory turnover.
  2. Assumes that all inventory records must be verified with the same frequency.
  3. Cannot be done in an independent demand situation.
  4. Is a process by which inventory records are verified.
Correct answer: (D)
Is a process by which inventory records are verified.

172. Policies based on ABC analysis might include investing

  1. More in inventory security for C items.
  2. More in supplier development for A items.
  3. The most time and effort verifying the accuracy of records for B items.
  4. Extra care in forecasting for C items.
Correct answer: (B)
More in supplier development for A items.

173. Higher demand uncertainty provides higher savings by pooling which of the following inventory?

  1. Seasonal inventory
  2. Pipeline inventory
  3. Safety inventory
  4. Decoupling inventory
Correct answer: (C)
Safety inventory

174. The two most important inventory-based questions answered by the typical inventory model are

  1. When to place an order and what is the cost of the order.
  2. When to place an order and how many of an item to order.
  3. How many of an item to order and with whom the order should be placed.
  4. How many of an item to order and what is the cost of this order.
Correct answer: (B)
When to place an order and how many of an item to order.

175. Cycle inventory helps in

  1. Taking care of any special event that does not occur on a regular basis
  2. Taking care of uncertainty in demand and supply of products/components
  3. Finding out the amount of stock required during a finite period in order to move the materials from one location to another
  4. Taking advantage of economies of scale and reducing cost within the supply chain
Correct answer: (D)
Taking advantage of economies of scale and reducing cost within the supply chain

176. Centralized system will provide benefits for the items which

  1. Are fast-moving
  2. Are slow moving and have high demand variability
  3. Have low demand variability
  4. Have high demand variability
Correct answer: (B)
Are slow moving and have high demand variability

177. The difference(s) between the basic EOQ model and the production order quantity model is (are) that

  1. The production order quantity model does not require the assumption of known, constant demand.
  2. There are no holding costs in the production order quantity model.
  3. The production order quantity model does not require the assumption of instantaneous delivery.
  4. The eoq model does not require the assumption of known, constant lead time.
Correct answer: (C)
The production order quantity model does not require the assumption of instantaneous delivery.

178. The inventory which is dependent on alternative modes of transportation is known as

  1. Safety inventory
  2. Pipeline inventory
  3. Decoupling inventory
  4. Seasonal inventory
Correct answer: (B)
Pipeline inventory

179. Inventory record accuracy would be decreased by

  1. Abc analysis.
  2. Increasing stockroom accessibility.
  3. Cycle counting.
  4. reorder points.
Correct answer: (B)
Increasing stockroom accessibility.

10. A system that keeps track of each withdrawal or addition to inventory continuously is

  1. A perpetual inventory system.
  2. A continuous inventory system.
  3. A fixed period system.
  4. A fixed quantity system.
Correct answer: (A)
A perpetual inventory system.
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